Gold steady as investors weigh Fed’s rate-hike plans after inflation report
A soft dollar keeps gold prices rangebound, while investors assess bullion’s safe-haven appeal
15 March 2023 - 07:36
byKavya Guduru
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Bengaluru — Gold prices edged up in rangebound trading on Wednesday due to a softer dollar, while investors assessed the US Federal Reserve’s rate-hike trajectory after a closely watched consumer prices report showed still-high inflation.
Spot gold was up 0.1% at $1,903.64 per ounce at 3.16am GMT, trading in a $6 range. Prices had briefly slipped below the key $1,900 level earlier in the session.
US gold futures eased 0.1% to $1,908.60.
“Some degree of relative calm on US banks and an overnight rise in treasury yields may temporarily reduce demand for safe-haven proxies” such as gold, said OCBC FX strategist Christopher Wong.
The dollar index was down 0.1%, making bullion less expensive for overseas buyers, while US treasury yields ticked higher.
“As focus shifts to the Federal Open Market Committee [FOMC] meeting next week, the question remains what guidance and how dots plot will evolve taking into consideration the recent development with some US banks vs combating inflation,” Wong said.
The Federal Reserve is expected to raise its benchmark rate by 25 basis points (bps) next week and again in May, as a government report showed US inflation remained high in February, and concerns of a long-lasting banking crisis eased.
The US consumer price index (CPI) rose 0.4% last month, after accelerating 0.5% in January. In the 12 months through February, the CPI increased by 6%.
Bullion is often seen as a hedge against inflation, but the opportunity cost of holding the non-yielding asset rises when interest rates are increased to bring down inflation.
“Investor allocation to gold remains low,” analysts at ANZ said in a note, but added they expect the banking turmoil to “reinvigorate investor demand over the longer term”.
Spot silver rose 0.6% to $21.81 per ounce, platinum added 0.5% at $987.64 and palladium firmed 0.3% at $1,510.92.
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 steady as investors weigh Fed’s rate-hike plans after inflation report
A soft dollar keeps gold prices rangebound, while investors assess bullion’s safe-haven appeal
Bengaluru — Gold prices edged up in rangebound trading on Wednesday due to a softer dollar, while investors assessed the US Federal Reserve’s rate-hike trajectory after a closely watched consumer prices report showed still-high inflation.
Spot gold was up 0.1% at $1,903.64 per ounce at 3.16am GMT, trading in a $6 range. Prices had briefly slipped below the key $1,900 level earlier in the session.
US gold futures eased 0.1% to $1,908.60.
“Some degree of relative calm on US banks and an overnight rise in treasury yields may temporarily reduce demand for safe-haven proxies” such as gold, said OCBC FX strategist Christopher Wong.
The dollar index was down 0.1%, making bullion less expensive for overseas buyers, while US treasury yields ticked higher.
“As focus shifts to the Federal Open Market Committee [FOMC] meeting next week, the question remains what guidance and how dots plot will evolve taking into consideration the recent development with some US banks vs combating inflation,” Wong said.
The Federal Reserve is expected to raise its benchmark rate by 25 basis points (bps) next week and again in May, as a government report showed US inflation remained high in February, and concerns of a long-lasting banking crisis eased.
The US consumer price index (CPI) rose 0.4% last month, after accelerating 0.5% in January. In the 12 months through February, the CPI increased by 6%.
Bullion is often seen as a hedge against inflation, but the opportunity cost of holding the non-yielding asset rises when interest rates are increased to bring down inflation.
“Investor allocation to gold remains low,” analysts at ANZ said in a note, but added they expect the banking turmoil to “reinvigorate investor demand over the longer term”.
Spot silver rose 0.6% to $21.81 per ounce, platinum added 0.5% at $987.64 and palladium firmed 0.3% at $1,510.92.
Reuters
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Gold gains 1% as investors retreat amid US banking rout
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