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July 18, 2023
Gold prices tick up as traders await Fed cues
(Reuter) – Gold prices edged up on Tuesday on a dollar that was close to hitting its lowest in over a year, while traders waited for retail sales data from the United States to gauge any impact on the U.S. Federal Reserve’s monetary tightening path.
Spot gold rose 0.3% to $1,959.54 per ounce . U.S. gold futures gained 0.4% to $1,963.70.
The dollar wobbled near an over one-year low. A weaker dollar makes gold cheaper for holders of other currencies.
While the upcoming Fed meeting might temporarily dim the appeal of gold, “the Fed is closer to end of tightening cycle,” said OCBC Executive Director and FX Strategist Christopher Wong.
“It should not take long to see real yields ease lower at some stage.”
Interest rate futures showed markets were pricing in another 25 basis points rate hike at the Fed’s July 25-26 meeting.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
“We also favor long gold as a risk-off hedge (safe haven proxy) against slowing global growth or any risk-off market event,” Wong added.
Speaking to Bloomberg TV on Monday, Treasury Secretary Janet Yellen said she did not expect the U.S. economy to enter a recession.
Investors expect the European Central Bank and the Bank of England to go further with their rate-hike cycle as they try to bring down inflation down to 2% that was at 5.5% in June and 8.7% in May respectively.
Minutes of the Reserve Bank of Australia’s July policy meeting earlier today showed a restrictive stance, choosing to keep interest rates steady this month.
Investors will also watch for U.S. retail sales data for June later in the day while weak Chinese economic data released the previous day continued to weigh on sentiment.
Spot silver rose 0.1% to $24.87 per ounce, platinum was up 0.7% to $982.43 while palladium jumped 1.1% to $1,298.30.
July 17, 2023
Gold edges lower on slight dollar uptick
(Reuter)- Gold prices edged lower on Monday as the dollar inched up, although investors largely bet on the U.S. Federal Reserve hitting the brakes soon on interest rate hikes.
Spot gold fell 0.1% to $1,952.74 per ounce , around $11 lower from the three-month high hit on Friday.
U.S. gold futures were down 0.4% to $1,957.60.
The dollar hovered above its April 2022 lows, making gold more expensive for holders of other currencies.
“Gold’s post-CPI rally has paused for breath, and that leaves the potential for a technically-driven retracement to the $1,940–$1,950 region,” said Matt Simpson, a senior market analyst at City Index.
Data in the U.S. last week hinted at a disinflationary trend as consumer prices grew at their slowest pace in more than two years.
“Whilst inflation remains high, markets are responding to the relative change over the absolute level of interest rates going forward. And if peak cycles are close, it is another supportive feature for gold, alongside central bank buying,” Simpson added.
Hikes are expected from the Fed and European Central Bank next week, and markets see the U.S. central bank likely stop before cuts next year, while in Europe another hike is expected.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
Top gold consumer, China’s economy grew at a frail pace in the second quarter, up 0.8% compared with a 2.2% expansion in the first quarter, with markets expecting authorities to unleash more stimulus to support growth.
The Hong Kong stock exchange halted trading due to the approaching Typhoon Talim, while Japan’s Nikkei was closed for a holiday, though futures were trading 0.3% lower.
Spot silver fell 0.6% to $24.78 per ounce, platinum was down 0.8% to $963.95 while palladium fell 0.6% to $1,263.24.
July 14, 2023
Gold set for best week since April on dollar drop
(Reuter)- Gold prices were set on Friday for their biggest weekly gain since April, after rallying close to a one-month high, as markets scale back expectations of further U.S. interest rate hikes, sending the dollar to its lowest in more than a year.
Spot gold was little changed at $1,959.81 per ounce , and up 1.9% for the week. U.S. gold futures were flat at $1,964.00.
Making gold less expensive for overseas investors, the dollar index touched its lowest level since April 2022.
Gold’s got room to sort of expand from here, said Matt Simpson, a senior market analyst at City Index, adding that the next major levels could be $1,985 to $2,000.
Data on Thursday showed U.S. producer prices barely rose in June, providing more evidence the economy had entered a disinflation phase.
Meanwhile, the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, indicating the U.S. labor market remained tight.
Federal Reserve Governor Christopher Waller said on Thursday he’s not ready to call an all clear on U.S. inflation and favors more rate hikes this year, saying the upcoming July meeting should bring an increase.
Markets have mostly priced-in another rate hike from the Federal Open Market Committee at its July 25 to 26 meeting, but expectations of further increases have dropped.
However, if the Fed does indicate more rate increases, “that could provide some nervousness (among gold investors)” Simpson added.
Higher interest rates increase the opportunity cost of holding non-yielding bullion.
“The near-term range looks to have shifted higher. There is now some decent support around the $1,940 level, while resistance awaits in the $1,970-75 region,” Tim Waterer, chief market analyst at KCM Trade, said.
Spot silver fell 0.2% to $24.8091 per ounce, but was set for its biggest weekly gain since March.
Platinum shed 0.4% to $969.08 and palladium dropped 1.1% to $1,280.62, but were poised for a second straight weekly rise.
July 13, 2023
Gold near one month high on hopes of Fed nearing end of rate hikes
(Reuter)- Gold prices advanced to a near one-month high on Thursday supported by a softer U.S. dollar, after U.S. inflation data raised hopes that the Federal Reserve would soon stop tightening its monetary policy.
Spot gold was up 0.1% to $1,959.79 per ounce, hitting its highest since June 16. U.S. gold futures ticked up 0.1% to $1,964.30.
U.S. consumer prices rose modestly in June and registered their smallest annual increase in more than two years as inflation continued to subside, but probably not fast enough to discourage the Fed from resuming raising interest rates later this month.
Therefore, a lot of focus remains on the central bank’s next rate-setting meeting, which could dictate near-term gold prices, said Brian Lan of Singapore dealer GoldSilver Central.
Recent hawkish comments from policymakers have weighed on gold, with bullion down more than $100 since its May highs.
Higher interest rates increase the opportunity cost of holding non-yielding bullion, even as it is seen as a safe investment during times of political and financial uncertainties.
“Therefore, while gold could go higher closer to the $2,000 mark, chances of prices coming down is more likely this quarter, and thus $1,800 remains a possibility,” Lan further said, adding the Fed could still strike a “cautious tone”.
In the broader financial market, Asian shares and bonds also rallied after U.S. inflation stoked speculation the end of the post-pandemic tightening cycle is in sight.
On investor radar now are U.S. initial jobless claims and the Producer Price Index report, due later in the day.
Among other precious metals, spot silver rose 0.3% to $24.2163 per ounce and palladium advanced 0.7% to $1,292.19.
Platinum gained 0.8% to $954.26, after rising 3% in the previous session.