Wait for inflation data puts gold into digestion mode
Trader caution ensures prices are less volatile
23 December 2022 - 08:40
byAshitha Shivaprasad
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Gold prices hemmed into a tight range on Friday in thin trading, as cautious traders awaited economic data due later in the day to gauge the US Federal Reserve’s (Fed) rate hike stance.
Spot gold was little changed at $1,792.80/oz as of 0238 GMT. US gold futures rose 0.4% to $1,801.80.
Investors’ attention turns to personal consumption expenditure (PCE) data due at 1330 GMT, for cues on inflation.
“Gold will get a boost if the data indicates that inflation has reined a little, which might raise expectations of the Fed slowing down on rate hikes,” said Brian Lan, MD at Singapore-based dealer GoldSilver Central.
Bullion prices dropped more than 1% in the previous session after US economic data highlighted the country’s economy rebounded faster than previously estimated, boosting the dollar and potentially setting the Fed on a keener path to fight inflation.
Data on Thursday showed new claims for unemployment benefits rose less than expected last week in the US, while the economy rebounded faster in the third quarter, rising 3.2% against the previously estimated 2.9%.
“The market is in a digestion tone after yesterday’s data. We saw a strong move to a news that was not especially dramatic because of low liquidity in the market before the Christmas holiday,” said Ilya Spivak, head of global macro at Tastytlive.
Though gold is considered a hedge against inflation and economic uncertainties, interest rates increase the opportunity cost of holding bullion since it pays no interest.
“I think gold prices will be less volatile next year and expect to resume an upward trend with recession likely in the picture,” Lan added.
Meanwhile, top gold consumer China reported 3,761 new symptomatic Covid-19 infections on December 22, compared with 3,030 a day earlier.
Spot silver rose 0.3% to $23.63, platinum gained 0.3% to $980.01 and palladium rose 0.2% to $1,683.21.
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.
Wait for inflation data puts gold into digestion mode
Trader caution ensures prices are less volatile
Gold prices hemmed into a tight range on Friday in thin trading, as cautious traders awaited economic data due later in the day to gauge the US Federal Reserve’s (Fed) rate hike stance.
Spot gold was little changed at $1,792.80/oz as of 0238 GMT. US gold futures rose 0.4% to $1,801.80.
Investors’ attention turns to personal consumption expenditure (PCE) data due at 1330 GMT, for cues on inflation.
“Gold will get a boost if the data indicates that inflation has reined a little, which might raise expectations of the Fed slowing down on rate hikes,” said Brian Lan, MD at Singapore-based dealer GoldSilver Central.
Bullion prices dropped more than 1% in the previous session after US economic data highlighted the country’s economy rebounded faster than previously estimated, boosting the dollar and potentially setting the Fed on a keener path to fight inflation.
Data on Thursday showed new claims for unemployment benefits rose less than expected last week in the US, while the economy rebounded faster in the third quarter, rising 3.2% against the previously estimated 2.9%.
“The market is in a digestion tone after yesterday’s data. We saw a strong move to a news that was not especially dramatic because of low liquidity in the market before the Christmas holiday,” said Ilya Spivak, head of global macro at Tastytlive.
Though gold is considered a hedge against inflation and economic uncertainties, interest rates increase the opportunity cost of holding bullion since it pays no interest.
“I think gold prices will be less volatile next year and expect to resume an upward trend with recession likely in the picture,” Lan added.
Meanwhile, top gold consumer China reported 3,761 new symptomatic Covid-19 infections on December 22, compared with 3,030 a day earlier.
Spot silver rose 0.3% to $23.63, platinum gained 0.3% to $980.01 and palladium rose 0.2% to $1,683.21.
Reuters
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