Gold close to five-week low on hawkish Fed comments
Strong US retail data dampens investor expectation for deeper and early interest rate cuts in 2024
18 January 2024 - 07:44
byHarshit Verma
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Bengaluru — Gold prices hovered near five-week lows on Thursday, as hawkish remarks from Federal Reserve officials and robust data dampened investor expectation for deeper and early interest rate cuts in US in 2024.
Spot gold edged 0.1% higher to $2,008.59/oz by 3.47am GMT, a day after it fell to $2,001.72 — its lowest since December 13.
US gold futures rose 0.2% to $2,010.70.
The dollar has strengthened substantially in the past few days, putting a strain on gold prices, Brian Lan at the Singapore-based dealer GoldSilver Central, said.
The dollar held close to a five-week peak after data overnight showed US retail sales increased more than expected in December, keeping the economy on solid ground heading into the New Year. Yields on the benchmark US 10-year treasury notes also hovered near five-week highs.
A stronger dollar makes greenback-priced gold more expensive for foreign currency holders.
“The year has just started and probably a lot of investors think that prices are not going any higher, so it’s time to take profit ... it’s a usual market cycle from what we see,” GoldSilver's Lan said.
Traders will be watching out for remarks from Atlanta Federal Reserve president Raphael Bostic, who is expected to speak at two separate events later in the day.
Bostic has said inflation could “see-saw” if policymakers cut rates too soon, echoing Fed governor Christopher Waller’s remark that the Fed should not rush to lower interest rates until lower inflation can clearly be sustained.
Money markets were betting on 142 basis points (bps) of Fed rate cuts this year, while pricing in a 61% chance of a March easing, according to LSEG’s interest rate probability app, IRPR.
Lower interest rates decrease the opportunity cost of holding bullion.
Spot silver rose 0.4% to $22.61/oz, platinum climbed 0.3% to $885.86, and palladium gained 1.1% to $925.32.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Gold close to five-week low on hawkish Fed comments
Strong US retail data dampens investor expectation for deeper and early interest rate cuts in 2024
Bengaluru — Gold prices hovered near five-week lows on Thursday, as hawkish remarks from Federal Reserve officials and robust data dampened investor expectation for deeper and early interest rate cuts in US in 2024.
Spot gold edged 0.1% higher to $2,008.59/oz by 3.47am GMT, a day after it fell to $2,001.72 — its lowest since December 13.
US gold futures rose 0.2% to $2,010.70.
The dollar has strengthened substantially in the past few days, putting a strain on gold prices, Brian Lan at the Singapore-based dealer GoldSilver Central, said.
The dollar held close to a five-week peak after data overnight showed US retail sales increased more than expected in December, keeping the economy on solid ground heading into the New Year. Yields on the benchmark US 10-year treasury notes also hovered near five-week highs.
A stronger dollar makes greenback-priced gold more expensive for foreign currency holders.
“The year has just started and probably a lot of investors think that prices are not going any higher, so it’s time to take profit ... it’s a usual market cycle from what we see,” GoldSilver's Lan said.
Traders will be watching out for remarks from Atlanta Federal Reserve president Raphael Bostic, who is expected to speak at two separate events later in the day.
Bostic has said inflation could “see-saw” if policymakers cut rates too soon, echoing Fed governor Christopher Waller’s remark that the Fed should not rush to lower interest rates until lower inflation can clearly be sustained.
Money markets were betting on 142 basis points (bps) of Fed rate cuts this year, while pricing in a 61% chance of a March easing, according to LSEG’s interest rate probability app, IRPR.
Lower interest rates decrease the opportunity cost of holding bullion.
Spot silver rose 0.4% to $22.61/oz, platinum climbed 0.3% to $885.86, and palladium gained 1.1% to $925.32.
Reuters
Worry about Chinese economy puts pressure on Asian equities
Oil tumbles as Chinese economic data raises concern about demand
Global stocks ease as investors dial back on rate cut bets
Asian stocks follow weaker Chinese shares
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
MARKET WRAP: JSE extends losses while rand hits worst level in five weeks
WATCH: Market report
JSE falls to two-month low as China GDP underwhelms
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.