Gold rebounds from one-month low after Fed's hawkish signal
Fed projects fewer rate cuts in 2025
Gold hits lowest since Nov. 18 earlier in the session
Investors await US PCE data due on Friday
Updates with mid-session trading
By Daksh Grover
Dec 19 (Reuters) -Gold prices gained more than 1% on Thursday, rebounding from a one-month low, as the market digested the U.S. Federal Reserve's hint of a gradual policy easing next year, with investors awaiting more data to gauge the economy's health.
Spot gold XAU= gained 1.1% to $2,617.14 per ounce as of 1149 GMT, having hit its lowest since Nov. 18 earlier in the session. U.S. gold futures GCv1 fell 0.8% to $2,631.10.
Markets initially dropped after Fed Chair Jerome Powell hinted at fewer rate cuts next year, but quickly recovered as investors recognized this aligned with recent expectations, said StoneX analyst Rhona O'Connell.
The Fed's "dot plot" released on Wednesday forecast two quarter-point rate cuts next year, aligning with recent futures market trends.
Powell said an interest rate hike does not appear to be a likely outcome as the Fed works to bring inflation down to its 2% target.
The focus now will be on key U.S. GDP and initial jobless claims data later in the day, besides core PCE data — the Fed's preferred inflation measure — on Friday.
"Gold sold off, showcasing once more that it is not an inflation hedge per se, but regained some lost ground on a threatened U.S. government shutdown," said Carsten Menke, analyst at Julius Baer.
U.S. President-elect Donald Trump's pre-inauguration push to sway Congress could complicate efforts to prevent a government shutdown, potentially disrupting air travel and law enforcement ahead of the Christmas holiday.
Gold is considered a safe investment option during economic and geopolitical turmoil and tends to thrive in a low-interest-rate environment.
"The short- to medium-term U.S. economic outlook might bring more headwinds than tailwinds for gold, extending the current consolidation," Menke said.
Elsewhere, the Bank of Japan held rates steady, but a dissenting call to raise borrowing costs signals potential policy tightening next year.
Spot silver XAG= edged up 0.5% to $29.51 per ounce, platinum XPT= added 0.9% at $928.70 and palladium XPD= advanced 1.5% to $916.56.
Spot gold price in USD per oz https://reut.rs/4gDFWOC
Reporting by Daksh Grover in Bengaluru; Editing by Shilpi Majumdar and Shailesh Kuber
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