Gold Prices Rise Amid Dollar Decline; Attention Turns to US Inflation Figures
Bollywoodfever, February 27: Gold prices inched higher on Tuesday as the dollar softened, with investors eagerly awaiting a crucial U.S. inflation report amidst a week packed with data releases and speeches from Federal Reserve officials, seeking clues on potential rate-cut timings by the central bank.
As of 0620 GMT, spot gold was up by 0.1% at $2,033.34 per ounce, while U.S. gold futures rose 0.2% to $2,043.00 per ounce.
“Ahead of the inflation number, we anticipate some degree of consolidation. We project gold to trade within a narrow range… the bias will lean towards ‘sell’ on any significant upward movement,” remarked Ajay Kedia, director at Kedia Commodities in Mumbai.
The support for gold comes on the heels of Japan and the UK slipping into a technical recession, a trend mirrored in the gold-silver ratio, currently standing at 90, as noted by Kedia. “However, there is no alteration in the war premium; everything has already been factored in.”
Recent comments from Fed policymakers have indicated that the U.S. central bank is in no rush to implement interest rate cuts, solidifying expectations against any rate adjustments before June.
Presently, markets are pricing in approximately 79 basis points of rate cuts for 2024, with a 61% probability of the first quarter-point cut occurring in June, according to LSEG’s interest rate probability app, IRPR. Lower interest rates enhance the attractiveness of holding non-yielding bullion.
This week, at least 10 Fed officials are scheduled to speak, while investor attention is drawn to the core personal consumption expenditures price index, the Fed’s preferred inflation measure, slated for release on Thursday.
Investors are also keeping an eye on the risk of U.S. government agency shutdowns if Congress fails to reach an agreement on a borrowing extension by Friday.
Meanwhile, spot platinum climbed 0.6% to $884.90 per ounce, palladium rose 0.3% to $951.63, and silver edged up by 0.1% to $22.57 per ounce.
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