Gold hits eight-month high on weaker dollar and upbeat Fed prospects
Data suggests that the effects of tightening in 2022 is starting to kick in and that the Bank can afford to slow its pace of tightening, analyst says
09 January 2023 - 07:32
byAshitha Shivaprasad
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 advanced to an eight-month high on Monday, as a weaker dollar made greenback-priced bullion cheaper for overseas buyers while hopes of less-aggressive US rate hikes also lifted sentiment.
Spot gold was up 0.7% at $1,878.55 per ounce at 4.56am, its highest level since May 9, 2022. US gold futures also rose 0.7% to $1,883.20.
The dollar index slipped 0.3%.
“Softer US data on Friday boosted gold's appeal. Data suggests that the Fed's cumulative tightening in 2022 is starting to have its effects felt on the economy and that the Fed can afford to slow its pace of tightening,” said OCBC FX strategist Christopher Wong.
Data showed on Friday that the US economy added jobs at a solid clip in December, but Fed officials could draw some solace from a moderation in wage gains. Also, US services industry activity contracted in December for the first time in more than 2½ years amid weakening demand, offering more evidence that inflation was abating.
Higher interest rates dim gold's allure as an inflation hedge and raise the opportunity cost of holding the non-yielding asset.
Market participants will now turn to Fed chair Jerome Powell's speech at a central bank conference in Stockholm on Tuesday and US consumer price index data due on Thursday.
“This week's CPI data would be key. Another deceleration in price pressures could boost appetite for gold while the dollar stays under pressure. However, an unexpected uptick in CPI may unnerve sentiments,” Wong added.
Traders also kept a tab on top bullion consumer China reopening borders that have been all but shut since the start of the Covid-19 pandemic.
Spot silver gained 0.9% to $24.03, while platinum rose 0.5% to $1,095.58 and palladium was up 0.7% to $1,817.59.
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 hits eight-month high on weaker dollar and upbeat Fed prospects
Data suggests that the effects of tightening in 2022 is starting to kick in and that the Bank can afford to slow its pace of tightening, analyst says
Bengaluru — Gold prices advanced to an eight-month high on Monday, as a weaker dollar made greenback-priced bullion cheaper for overseas buyers while hopes of less-aggressive US rate hikes also lifted sentiment.
Spot gold was up 0.7% at $1,878.55 per ounce at 4.56am, its highest level since May 9, 2022. US gold futures also rose 0.7% to $1,883.20.
The dollar index slipped 0.3%.
“Softer US data on Friday boosted gold's appeal. Data suggests that the Fed's cumulative tightening in 2022 is starting to have its effects felt on the economy and that the Fed can afford to slow its pace of tightening,” said OCBC FX strategist Christopher Wong.
Data showed on Friday that the US economy added jobs at a solid clip in December, but Fed officials could draw some solace from a moderation in wage gains. Also, US services industry activity contracted in December for the first time in more than 2½ years amid weakening demand, offering more evidence that inflation was abating.
Higher interest rates dim gold's allure as an inflation hedge and raise the opportunity cost of holding the non-yielding asset.
Market participants will now turn to Fed chair Jerome Powell's speech at a central bank conference in Stockholm on Tuesday and US consumer price index data due on Thursday.
“This week's CPI data would be key. Another deceleration in price pressures could boost appetite for gold while the dollar stays under pressure. However, an unexpected uptick in CPI may unnerve sentiments,” Wong added.
Traders also kept a tab on top bullion consumer China reopening borders that have been all but shut since the start of the Covid-19 pandemic.
Spot silver gained 0.9% to $24.03, while platinum rose 0.5% to $1,095.58 and palladium was up 0.7% to $1,817.59.
Reuters
SA bonds ready for resurrection after a year of horror
Rand expected to remain volatile in 2023
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
Gold eyes another weekly gain ahead of US jobs data
ECONOMIC WEEK AHEAD: Focus will be on policy uncertainty and manufacturing ...
US rate hopes and China’s reopening boost Asian shares
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.