Investing.com – Gold prices rebounded from session lows as the dollar came under pressure after data showed inflation continued to stutter amid growing speculation that President Donald Trump is likely to pick Federal Reserve Governor Jerome Powell to replace current Fed chair Janet Yellen.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange rose by $5.59, or 0.44%, to $1,277.28 a troy ounce.
Gold prices steadied ahead of the Federal Reserve’s two-day policy meeting which gets underway on Tuesday after data showed inflation remained subdued while consumer spending grew at its fastest rate in more than eight years.
The Federal Reserve's preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, rose 1.3% in the 12 months through September.
That was in-line with expectations but well below the Fed’s 2% target, fuelling expectations that the trend of subdued inflation will keep interest rates lower for longer.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 1% last month, the Commerce Department said on Monday. That was the biggest jump in consumer spending since August 2009.
The mixed duo of reports come amid reports that President Donald Trump’s is leaning toward appointing Federal Reserve Governor Jerome Powell – who shares a similar stance to Janet Yellen on monetary policy – to be the next chairman of the Fed, Reuters reported Monday, citing a source.
Gold prices are sensitive to moves higher in both bond yields and the U.S. dollar – A higher dollar makes gold more expensive for holders of foreign currency while higher U.S. rates, lift the opportunity cost of holding non-yielding assets such as bullion.
Gold prices have dropped for two-straight weeks as traders continued to unwind their bullish bets on the precious metal amid a rebound in the dollar and growing expectations that global central banks will continue to tighten monetary policy.
Net bullish bets on gold fell to 191,400, according to a report from the Commodity Futures Trading Commission (CFTC) on Friday.
In other precious metal trade, silver futures added 0.60% to $16.85 a troy ounce while platinum futures rose 0.27% to $920.85.
Copper traded at $3.11, up 0.23% while natural gas rose by 0.44% to $2.98.