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Gold prices eased in Thursday's session, December 18, after a 5-day rally as investors shifted their focus back towards risky assets after data showed a lower-than-expected rise in US inflation, reinforcing bets that the US Federal Reserve could continue its loose monetary policy in its upcoming meeting.

Though falling rates could also benefit the bullion, the recent run-up in the metal appears to have prompted investors to lock in gains and bring AI-related trade back into focus.

The February futures contract on MCX opened slightly lower at ₹1,34,736 per 10 grams, compared to the previous close of ₹1,34,894, but pressure built up, causing it to drop to ₹1,33,728, a decline of ₹1,166.

Meanwhile, silver prices also eased from record highs, as the March silver futures contract on MCX fell ₹5,759 per kg to the day's low of ₹2,01,676.

US inflation eased to 2.7% in November, below forecasts, while core inflation fell to 2.6%, its lowest since April 2021. The data offered some relief after months of sticky price pressure, weighing slightly on the dollar as it reinforced expectations that price pressures are cooling.

The data reinforced expectations that the US Federal Reserve could cut interest rates in January, following three consecutive rate reductions since September that brought the benchmark funds rate to a target range of 3.5%–3.75%.

Following the US inflation print, the US dollar fell to 98.3 against the basket of currencies.

The inflation report was followed by labor market data, which showed that the unemployment rate rose sharply to 4.6% in November, the highest level since September 2021.

Meanwhile, geopolitical risks remained in focus, adding further upside momentum, as the U.S. moved to halt sanctioned Venezuelan oil shipments following last week’s tanker seizure and military deployment, while Russian President Vladimir Putin reaffirmed firm territorial demands in Ukraine despite intensified U.S. diplomatic efforts.

Disclaimer: We advise investors to check with certified experts before making any investment decisions.

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