Gold inches up as weaker dollar, safe-haven demand lend support

Gold prices edged higher on Thursday, helped by a softer U.S. dollar and the Middle East conflict lifting safe-haven appeal, while investors await further comments from a Federal Reserve official to gauge the central bank’s interest rate trajectory.

Spot gold rose 0.3% to $2,011.29 per ounce by 0955 GMT but was lingering near its five-week low hit in the previous session. U.S. gold futures also gained 0.3% to $2,013.40.

The U.S. on Wednesday put the Yemen-based Houthi rebels back on its list of terrorist groups, as the militants attacked their second U.S.-operated vessel in the Red Sea region this week.

Gold is buoyed by “a small geopolitical risk premium and small reversal lower in the dollar,” said Ole Hansen, Saxo Bank’s head of commodity strategy.

The dollar, opens new tab pulled back after hitting a five-week peak in the previous session as U.S. retail sales increased more than expected in December.

Traders will be watching out for remarks from Atlanta Fed President Raphael Bostic, who is expected to speak at two separate events later in the day.

Bostic on Sunday said inflation could “see-saw” if policymakers cut rates too soon, echoing Fed Governor Christopher Waller’s remark this week that the Fed should not rush to lower interest rates until lower inflation can clearly be sustained.

Traders are pricing in a 63% chance of a March rate cut, according to CME’s Fed Watch tool.

A stronger dollar makes gold more expensive for buyers in other currencies, while high-interest rates are also bearish for non-yielding bullion.

Spot silver rose 0.3% to $22.61 per ounce.

In 2024, “silver may struggle more than gold given the current weak outlook for China and the global economy,” Hansen added.

Platinum climbed 0.9% to $891.32, and palladium gained 1.4% to $928.25.