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Gold rates edge higher on short covering

Area gold edged greater on Monday, supported by brief covering after a weekly loss on Friday due to the Federal Reserve's careful stance on rate cuts in the upcoming year.

Area gold was up 0.2% to $2,626.44 per ounce, as of 0313 GMT. U.S. gold futures relieved 0.1% to $2,642.10.

The Fed's 25-basis-point decrease on Dec. 18 and the cautious note struck by its economic projections and expectations of fewer cuts in 2025 pressed gold to its most affordable because Nov. 18 recently.

We are getting in the holiday mode and gold's primarily been assisted by short covering which began on Friday itself and there is some technical support too, stated Ajay Kedia, director at Kedia Commodities, Mumbai.

On Friday, gold gained on a softer U.S. dollar and Treasury yields when U.S. economic data hinted at a downturn in inflation.

Data on Friday showed month-to-month inflation in the U.S. slowed in November after little improvement in recent months. The personal intake expenses (PCE) index rose 0.1% last month after an unrevised 0.2% gain in October.

San Francisco Federal Reserve President Mary Daly and two other Fed policymakers on Friday stated they felt the central bank would likely resume rate cuts next year but take their time given that the recalibration phase was over.

The Russian reserve bank kept the key rates of interest on hold at 21% on Friday to surprise the marketplace.

Higher rates dull non-yielding bullion's appeal.

Meanwhile, COMEX gold speculators cut net long positions by 16,251 contracts to 203,937 in the week to Dec. 17, data showed on Friday.

I see excellent assistance for gold at $2,595 and resistance would be at $2,664, Kedia stated.

Spot silver increased 0.7% to $29.72 per ounce and platinum climbed 1% to $935.47, while palladium included 0.2% to $922.31.

(source: Reuters)