Gold Hits One-Month High as Dollar Slides on Inflation Data

Gold prices surged to a one-month peak on Thursday, nearing $2,700 per ounce, as softer U.S. inflation data fueled hopes of lower interest rates in 2025. Spot gold rose to $2,697.45 an ounce, while February gold futures climbed 0.4% to $2,728. Lower rates enhance gold's appeal by reducing the opportunity cost of holding non-yielding assets.

December's Consumer Price Index (CPI) showed slightly lower-than-expected inflation, reinforcing expectations of Federal Reserve rate cuts. The central bank is anticipated to lower rates twice in 2025. This optimism pushed the dollar off recent highs, further boosting gold demand.

However, gold's upside was tempered by easing safe-haven demand after a U.S.-brokered Israel-Hamas ceasefire. The Middle East conflict had driven strong gold buying in 2024. A rally in risk-driven assets, spurred by Fed rate cut projections, also limited gains.

Investors remain cautious, awaiting key U.S. retail sales and jobless claims data for further economic signals. Other precious metals saw mixed movement: platinum futures dipped 0.1% to $948.15 an ounce, while silver edged up 0.3% to $31.622.

Copper prices steadied after recent gains, with London futures rising 0.3% to $9,192.50 per ton. Markets now await China's fourth-quarter GDP data for insights on demand from the world’s top copper importer.