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Gold falls on dollar strength, inflation information sparks caution on Fed rate cuts

Gold rates slipped on Thursday as the U.S. dollar reinforced, while investors assessed a flurry of economic information revealing stalled inflation progress, recommending the Federal Reserve might tread meticulously on further interest rate cuts.

Spot gold fell 0.3% to $2,627.60 per ounce, since 0302 GMT.

U.S. gold futures shed 0.5% to $2,627.00.

The dollar index was up 0.1%, decreasing gold's appeal for holders of other currencies.

The market is concentrating on the Fed's rate cuts, with the latest Core Personal Intake Expenses (PCE) data recommending slowing inflation, resulting in expectations that the Fed's policy next year may be less dovish than formerly anticipated, stated Kelvin Wong, OANDA's senior market expert for Asia Pacific.

Meanwhile, the Fed's struggle to bring inflation back to its 2% target, integrated with the possibility of greater tariffs under the upcoming Trump administration may constrain the U.S. main bank's ability to implement rate cuts next year.

Markets now see a 64.7% chance of a quarter-point rate cut in December, as per the CME group's FedWatch tool.

In Other Places, Mexican President Claudia Sheinbaum alerted of retaliation if Trump enforces a 25% tariff, citing potential U.S. job losses and greater customer rates.

Gold is considered as a safe-haven investment during periods of economic or geopolitical instability, including trade wars.

Trading is expected to be thin with U.S. markets closed on Thursday for Thanksgiving vacation.

In the short term, especially over the next few days to two weeks, gold might come under additional pressure. However, the longer-term bullish pattern for gold stays undamaged, Wong included.

SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, stated its holdings fell 0.10% to 878.55 metric lots on Wednesday.

Spot silver fell almost 1% to $29.78 per ounce, platinum 0.1% to $928.05 and palladium was steady at $972.75.

(source: Reuters)