Higher inflation adds pressure on the US Fed to keep interest rates elevated, weighing on non-yielding assets such as gold
15 March 2024 - 08:42
byHarshit Verma
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Bengaluru — Gold prices were on track on Friday to snap a three-week winning streak as surprisingly hot US inflation readings prompted traders to re-think on how swiftly and deeply the Federal Reserve could cut interest rates this year.
Spot gold was up 0.1% at $2,163.92/oz, as of 3.38 GMT, but on track to post a weekly fall of more than 0.6%, its first since mid-February.
US gold futures were steady at $2,168.00.
“It’s hard to ignore the upside surprise from inflation now ... I don’t see any fresh catalysts to propel gold above a major resistance of $2,200 in the short term,” said Hugo Pascal, a precious metals trader at InProved.
US producer prices increased more than expected in February. A reading on consumer inflation earlier this week also showed some stickiness in inflation.
Higher inflation adds pressure on the US Fed to keep interest rates elevated, weighing on non-yielding assets such as gold, and increasing appeal for bonds, raising the dollar.
US 10-year treasury yields rose nearly 20 bps to 4.2824% this week so far, and the dollar index gained more than 0.7% this week so far, on pace for its largest weekly gain since mid-January.
A firmer dollar makes gold more expensive for other currency holders.
Other data showed US retail sales rebounded in February, but were below analysts’ estimates, while fewer people sought unemployment claims.
Traders have pared back the chances of a rate cut at the US Fed’s June meeting to 61%, from about 75% last Friday, according to LSEG’s rate probability app. For 2024, market sees about three rate cuts, down from between three to four last Friday.
Spot platinum fell 0.4% to $927.35/oz, palladium dropped 0.2% to $1,066.86/oz, while silver was up 0.6% at $24.97/oz. All three metals were poised to clock a weekly gain.
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 likely to end three-week winning streak
Higher inflation adds pressure on the US Fed to keep interest rates elevated, weighing on non-yielding assets such as gold
Bengaluru — Gold prices were on track on Friday to snap a three-week winning streak as surprisingly hot US inflation readings prompted traders to re-think on how swiftly and deeply the Federal Reserve could cut interest rates this year.
Spot gold was up 0.1% at $2,163.92/oz, as of 3.38 GMT, but on track to post a weekly fall of more than 0.6%, its first since mid-February.
US gold futures were steady at $2,168.00.
“It’s hard to ignore the upside surprise from inflation now ... I don’t see any fresh catalysts to propel gold above a major resistance of $2,200 in the short term,” said Hugo Pascal, a precious metals trader at InProved.
US producer prices increased more than expected in February. A reading on consumer inflation earlier this week also showed some stickiness in inflation.
Higher inflation adds pressure on the US Fed to keep interest rates elevated, weighing on non-yielding assets such as gold, and increasing appeal for bonds, raising the dollar.
US 10-year treasury yields rose nearly 20 bps to 4.2824% this week so far, and the dollar index gained more than 0.7% this week so far, on pace for its largest weekly gain since mid-January.
A firmer dollar makes gold more expensive for other currency holders.
Other data showed US retail sales rebounded in February, but were below analysts’ estimates, while fewer people sought unemployment claims.
Traders have pared back the chances of a rate cut at the US Fed’s June meeting to 61%, from about 75% last Friday, according to LSEG’s rate probability app. For 2024, market sees about three rate cuts, down from between three to four last Friday.
Spot platinum fell 0.4% to $927.35/oz, palladium dropped 0.2% to $1,066.86/oz, while silver was up 0.6% at $24.97/oz. All three metals were poised to clock a weekly gain.
Reuters
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