Gold slips as dollar gains momentum
Gold prices inched lower on Wednesday as the U.S. dollar firmed, while expectations of a slowdown in the pace of the U.S. Fed’s interest rate hikes limited losses.
Spot gold dipped 0.3% to $1,902.59 per ounce, as of 0631 GMT, after hitting a session low of $1,896.32. Prices hit a near nine-month high on Monday. U.S. gold futures fell 0.3% to $1,903.90.
Dimming appetite for the greenback-priced bullion, the dollar index gained 0.3% as the yen sank after the Bank of Japan kept its yield curve controls in place.
“Gold is pressured as the dollar is seeing a recovery,” said Hareesh V, head of commodity research at Geojit Financial Services.
“Recession worries and the Federal Reserve’s policy decision would be the major catalysts for prices in the near future.”
Investors now await the U.S. producer price index and retail sales data due later in the day.
“Market focus is going to be on economic data. If the narrative continues to be that inflation is cooling and interest rates will come down, then it will be bullish for gold,” said Edward Meir, a metals analyst at Marex.
The U.S. central bank raised rates by 75 basis points (bps) four times last year, before slowing to a 50-bp increase in December. Traders are mostly pricing in a 25-bp hike at the next policy meeting.
Lower interest rates tend to be beneficial for bullion, decreasing the opportunity cost of holding the non-yielding asset.
The stopping point for rate increases will depend on the path of inflation, Richmond Fed President Tom Barkin said on Tuesday.
“If the Chinese economy recovers, it should be positive for gold as jewelry demand will pick up,” Meir added.
On Tuesday, officials at the World Economic Forum said the top bullion consumer’s reopening could drive global growth beyond expectations.
Silver rose 0.4% to $24.02 per ounce, platinum lost 0.7% to $1,031.88 and palladium dropped 0.6% to $1,733.13. (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich, Subhranshu Sahu and Nivedita Bhattacharjee)
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