Gold holds recent gains as markets await GDP, inflation readings

By Ambar Warrick

Investing.com-- Gold prices rose on Thursday as fears of a 2023 recession spurred some safe haven plays into the yellow metal, with focus now turning to key readings on U.S. economic growth and inflation due this week.

Bullion prices rallied this week against a weaker dollar, which was in part dented by a less dovish than expected stance from the Bank of Japan. The greenback was also dented by growing bets that U.S. inflation has peaked, which could invite a slower pace of rate hikes by the Federal Reserve.

Spot gold rose 0.2% to $1,818.58 an ounce, while gold futures rose 0.1% to $1,827.45 an ounce by 20:08 ET (01:08 GMT). The yellow metal was trading up 1.5% for the week, and was close to a five-month high.

Markets are now awaiting revised U.S. GDP data for the third quarter. A preliminary reading showed that the economy grew a better-than-expected 2.9% in the September quarter, with analysts forecasting the figure to remain the same in its first revision due later in the day.

Focus this week is squarely on the U.S. Personal Consumption Expenditure price index, which is the Federal Reserve’s preferred inflation gauge. The core index is expected to have eased further in November from the prior month.

But the index still remains well above the Fed’s annual target range, indicating that the central bank still needs to tighten policy further to curb inflation.

The prospect of rising interest rates in developed markets is likely to keep gold prices subdued in the coming months, with the Bank of Japan, European Central Bank, and the Bank of England also sending hawkish messages.

Other precious metals rose on Thursday, although their outlook also remains clouded. Focus this week is also on consumer inflation data from Japan, especially after the BOJ somewhat tightened policy after nearly a decade of accommodative measures.

Among industrial metals, copper prices surged on more signs of an economic reopening in China, even as the country grapples with a massive spike in COVID-19 cases.

Copper futures rose 0.7% to $3.8425 a pound and were set to gain over 2% this week.

But prices of the red metal are still trading lower for the year, with their outlook remaining uncertain in the face of rising interest rates and a potential recession.