Investors await US GDP data and outcome of European Central Bank’s policy meeting
25 January 2024 - 08:33
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 a one-week low on Thursday, pressured by a firmer US dollar and higher bond yields following strong business activity data, while investors awaited US GDP numbers and the European Central Bank's policy meeting later in the day.
Spot gold rose 0.2% to $2,015.83/oz by 4.24am GMT. US gold futures were unchanged at $2,015.80.
Bullion hit its lowest level in nearly a week on Wednesday after data suggested that the US economy kicked off 2024 on a strong note, with business activity picking up in January and inflation appearing to abate.
“The US economy keeps defying the doom and gloom and that’s allowed the markets to price out policy easing and the risk of a recession,” said Kyle Rodda, a financial market analyst at Capital.com.
The dollar index rose 0.1% to hover near a six-week high, making greenback-priced gold less attractive to other currency holders, while yields on benchmark US 10-year treasury notes were not far from a more than one-month high of 4.1980% touched last week.
Given that there is still a chance of March rate cut implied in money markets, strong data over the next few weeks and a probable pushback from the Fed at the end of its January policy meeting will make gold vulnerable to further downside, said Rodda.
Markets are pricing in a 43% chance of a Fed rate cut in March. However, those expectations largely have been deferred to May with an 88% probability of policy easing, according to LSEG’s interest rate probability app IRPR.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
Investors are now awaiting the first reading of fourth-quarter US GDP due at 1.30pm GMT, European Central Bank policy decision at 3.15pm GMT, and the personal consumption expenditure data on Friday.
Spot silver rose 0.4% to $22.76/oz, platinum climbed 0.3% $901.53, and palladium gained 0.1% to $964.07.
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.
Firm dollar keeps gold near one-week low
Investors await US GDP data and outcome of European Central Bank’s policy meeting
Bengaluru — Gold prices hovered near a one-week low on Thursday, pressured by a firmer US dollar and higher bond yields following strong business activity data, while investors awaited US GDP numbers and the European Central Bank's policy meeting later in the day.
Spot gold rose 0.2% to $2,015.83/oz by 4.24am GMT. US gold futures were unchanged at $2,015.80.
Bullion hit its lowest level in nearly a week on Wednesday after data suggested that the US economy kicked off 2024 on a strong note, with business activity picking up in January and inflation appearing to abate.
“The US economy keeps defying the doom and gloom and that’s allowed the markets to price out policy easing and the risk of a recession,” said Kyle Rodda, a financial market analyst at Capital.com.
The dollar index rose 0.1% to hover near a six-week high, making greenback-priced gold less attractive to other currency holders, while yields on benchmark US 10-year treasury notes were not far from a more than one-month high of 4.1980% touched last week.
Given that there is still a chance of March rate cut implied in money markets, strong data over the next few weeks and a probable pushback from the Fed at the end of its January policy meeting will make gold vulnerable to further downside, said Rodda.
Markets are pricing in a 43% chance of a Fed rate cut in March. However, those expectations largely have been deferred to May with an 88% probability of policy easing, according to LSEG’s interest rate probability app IRPR.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
Investors are now awaiting the first reading of fourth-quarter US GDP due at 1.30pm GMT, European Central Bank policy decision at 3.15pm GMT, and the personal consumption expenditure data on Friday.
Spot silver rose 0.4% to $22.76/oz, platinum climbed 0.3% $901.53, and palladium gained 0.1% to $964.07.
Reuters
MARKET WRAP: Rand adds to gains while JSE buoyed by China stimulus
WATCH: Market Report
WATCH: How SA’s elections could affect the investment landscape
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
Oil gains ground after unexpected fall in US stocks
Traders strike cautious tone in Asia ahead of ECB meeting
Gold firms as dollar eases
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.