Gold edges down as dollar firms; inflation data in focus

Gold prices edged lower on Thursday after a more than 2% gain in the previous session, as the U.S. dollar firmed ahead of a key inflation report due later this week that could provide more cues on the U.S. interest rate trajectory.

FUNDAMENTALS

* Spot gold dipped 0.4% to $4,961.57 per ounce by 0112 GMT, ‌after gaining ⁠2.1% ⁠in the previous session.


* U.S. gold futures for April delivery were down 0.6% at $4,981.

* The dollar hit its highest level in more than a week, making greenback-priced bullion more expensive for other currency holders.

* Mainland Chinese, Hong Kong, Singapore, Taiwan and South Korea markets were closed for the Lunar New Year holidays, which means low volumes and possibly ⁠volatile moves, traders ‌said.

* U.S. Federal Reserve policymakers were in near-unanimous agreement to keep interest rates on hold at their meeting ⁠last month, but remained split over their next steps, with "several" open to rate hikes if inflation remains elevated, others inclined to support further cuts if inflation recedes.

* Markets currently expect three 25-basis-point rate cuts this year, according to CME's FedWatch Tool.

* Investors now await the weekly jobless claims report due later in the day and the Personal Consumption Expenditure (PCE) data, the Fed's preferred inflation ‌gauge, due on Friday for more cues on monetary policy. Non-yielding bullion tends to do well in low-interest-rate environments.

* Gold gained more than 2% on ⁠Wednesday on safe-haven demand as two days of peace talks in Geneva between Ukraine and Russia ended without a breakthrough. Ukraine President Volodymyr Zelenskiy said he was dissatisfied with the outcome, while Washington reported "meaningful progress".

* Spot silver eased 0.5% to $76.83 per ounce after dropping more than 5% on Wednesday.

* Spot platinum edged 0.1% down to $2,069.35 per ounce, while palladium lost 0.5% to $1,707.53.

DATA/EVENTS (GMT)

1330 US International Trade Dec

1330 US Initial Jobless Clm Weekly

1330 US Philly Fed Business Indx Feb

1500 EU Consume Confid. Flash Feb