While the US dollar staggers, precious metals find unexpected lustre in investors’ cautious optimism towards surging inflation data
12 October 2023 - 07:39
by Swati 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 hit two-week highs on Thursday, as the US dollar and treasury yields stumbled on the Federal Reserve’s cautious approach on interest rates, while investors awaited a key inflation report for more clarity on future policy path.
Spot gold rose 0.2% to $1,877.67 per ounce by 3.39am GMT, its highest level since September 29. US gold futures were up 0.2% at $1,890.80.
The dollar index and US treasury yields were rooted near two-week lows, making non-interest-paying gold more attractive.
Minutes of the Fed’s September meeting showed growing uncertainty about the path of the US economy, which pushed policymakers into a newly cautious stance last month, a position reaffirmed by top Fed officials in a series of statements this week.
“We are almost at the end of interest rates hikes and there could probably be a last one of 25 basis points [bps], which would not have a significant impact on the market, because this is largely expected,” said Brian Lan, MD at Singapore dealer GoldSilver Central.
“But one thing for sure is that people would be expecting interest rates will still continue to remain high ... so precious metals price will remain [broadly] subdued.”
High interest rates raise the opportunity cost of holding non-yielding bullion, which is still down over 9% from near record highs hit in May. Investors still see a 26% chance of a rate hike at the Fed’s December meeting.
The consumer price index (CPI) data, which is expected to show inflation moderated last month, is due later in the day and comes after data on Wednesday showed US producer prices increased more than expected in September, but underlying inflation pressures at the factory gate continued to abate.
Elsewhere, spot silver firmed 0.1% to $22.09 per ounce, platinum advanced 0.5% to $889.70 and palladium gained 0.7% to $1,174.80.
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 at two-week peak amid Fed’s rate hesitation
While the US dollar staggers, precious metals find unexpected lustre in investors’ cautious optimism towards surging inflation data
Bengaluru — Gold prices hit two-week highs on Thursday, as the US dollar and treasury yields stumbled on the Federal Reserve’s cautious approach on interest rates, while investors awaited a key inflation report for more clarity on future policy path.
Spot gold rose 0.2% to $1,877.67 per ounce by 3.39am GMT, its highest level since September 29. US gold futures were up 0.2% at $1,890.80.
The dollar index and US treasury yields were rooted near two-week lows, making non-interest-paying gold more attractive.
Minutes of the Fed’s September meeting showed growing uncertainty about the path of the US economy, which pushed policymakers into a newly cautious stance last month, a position reaffirmed by top Fed officials in a series of statements this week.
“We are almost at the end of interest rates hikes and there could probably be a last one of 25 basis points [bps], which would not have a significant impact on the market, because this is largely expected,” said Brian Lan, MD at Singapore dealer GoldSilver Central.
“But one thing for sure is that people would be expecting interest rates will still continue to remain high ... so precious metals price will remain [broadly] subdued.”
High interest rates raise the opportunity cost of holding non-yielding bullion, which is still down over 9% from near record highs hit in May. Investors still see a 26% chance of a rate hike at the Fed’s December meeting.
The consumer price index (CPI) data, which is expected to show inflation moderated last month, is due later in the day and comes after data on Wednesday showed US producer prices increased more than expected in September, but underlying inflation pressures at the factory gate continued to abate.
Elsewhere, spot silver firmed 0.1% to $22.09 per ounce, platinum advanced 0.5% to $889.70 and palladium gained 0.7% to $1,174.80.
Reuters
Gold shines as dollar dips on Fed rate hesitation
Gold rises further on gains fuelled by Middle East conflict
Gold rises as investors seek safety from Middle East clashes
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
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.