At 12:30 GMT, XAU/USD $ 2804.96, an increase of $ 10.80 or +0.39%.
Purchasing and inflation risks of the Central Bank keep gold supported
In addition to trade tensions, the stable central banking demand remains an important mainstay for gold. “We see the central bank buy as the strongest structural strength on the gold market,” said Carsten Menke, an analyst at Julius Baer.
Traders are now moving the focus to the upcoming American price index of the American personal consumption expenditure (PCE), the preferred measure of the Federal Reserve. The report can offer new instructions on the following policy movement of the FED. Earlier this week, FED chairman Jerome Powell repeated that the decisions of interest rate would depend on inflation and labor market conditions.
In the meantime, the American GDP data that was released on Thursday showed, the economy grew with a weaker than expected rate of 2.3% in the fourth quarter. However, consumer expenditure rose at the fastest pace in almost two years, which suggests that the inflatoid pressure could continue to exist.
Treasury delivers an edge higher if traders are braced for inflation data
US Treasury proceeds rose higher on Friday when investors positioned themselves for important economic releases, including the PCE inflation report, personal expenditures and data from labor costs.
The FED kept rates stable at 4.25% -4.50% during the first meeting of the year, with reference to inflation risks despite the political pressure for cuts. Powell stated that the central bank should see “real progress on inflation or any weakness on the labor market” before he is considering adjustments. With policy uncertainty, gold remains a strong hedge.