(Bloomberg) -- Gold held a three-day advance after a key US inflation report reaffirmed expectations that the Federal Reserve will likely cut interest rates next week.
US consumer prices rose at a firm pace in November that was in line with expectations. The so-called core consumer price index — which excludes food and energy costs — increased 0.3% for a fourth straight month, Bureau of Labor Statistics figures showed Wednesday. From a year ago, it rose 3.3%.
Treasury yields pushed lower after the print, helping bullion eke out a small gain. Swap traders continued to bet on a Fed rate cut next week.
Gold hit an all-time high above $2,790 in October, supported by the Fed’s pivot to easing, haven demand and central-bank buying. Prices — which have rallied more than 30% this year — have enjoyed a lift in recent sessions after the People’s Bank of China reported that it has resumed purchases after a six-month pause.
China’s PBOC, which holds large USD reserves and has a strategic interest in reserves diversification, “may even increase gold demand during periods of local currency weakness to boost confidence in their currency,” according to analysts at Goldman Sachs Group Inc.
China has purchased gold “systematically” via the over-the-counter market in London during periods of yuan weakness, including in 2014-2016, 2018-2020, and 2022 until today, Goldman said in a note on Tuesday.
Technical factors were also helping bullion, with trading volumes increasing as futures this week “convincingly” broke out of a consolidation phase, according to Chris Weston, Pepperstone Group Ltd. head of research.
Gold for immediate delivery was up 0.2% at $2,700.52 an ounce at 9:35 a.m. in New York, following a 1.3% gain on Tuesday. The Bloomberg Dollar Spot Index rose 0.1%. Silver, platinum and palladium all fell.
--With assistance from Sybilla Gross.
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