PRECIOUS-Gold holds steady as traders eye U.S. inflation data

BY Reuters | ECONOMIC | 01/27/23 05:03 AM EST


Platinum, palladium set for third straight weekly drop


U.S. PCE data due at 1330 GMT

(Updates prices)

By Kavya Guduru

Jan 27 (Reuters) - Gold prices steadied on Friday after robust U.S. economic data was seen as fodder for the Federal Reserve to keep interest rates high for longer, but caution ahead of inflation data and the policy meeting next week put a floor under bullion prices.

Spot gold ticked 0.1% higher to $1,930.48 per ounce by 1255 GMT after retreating nearly 1% in the previous session following the U.S. data.

U.S. gold futures were flat at $1,930.20.

The U.S. GDP numbers are "prompting speculation that even though inflation is starting to look a little bit more benign, the Fed will probably have to keep rates higher for longer," pressuring gold, said Michael Hewson, chief markets analyst at CMC Markets.

Data on Thursday showed the U.S. economy grew faster than expected, but most economists expect a recession by the second half of the year, though a short and mild one compared with previous downturns because of extraordinary labor market strength.

The dollar index, meanwhile, was largely steady, making greenback-priced bullion a less attractive bet.

Investors are keeping a close eye on the central bank's two-day policy meeting next week, with a 25-basis-point rate increase widely expected.

Gold, which pays no interest, tends to benefit when interest rates are low as it reduces the opportunity cost of holding bullion.

"However, this weakening of the rate hikes (by the Fed) has long since been priced into gold so it would take a move that doesn't conform to expectations to significantly impact the gold price," Kinesis Money analyst Rupert Rowling said in a note.

U.S. personal consumption expenditures (PCE) data due at 1330 GMT is also on the radar.

Spot silver fell 0.8% to $23.7063 per ounce, platinum dropped 0.9% to $1,009.41.

Palladium shed 0.2% to $1,673.97. (Reporting by Kavya Guduru in Bengaluru; Editing by Shailesh Kuber and Sherry Jacob-Phillips)

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