Gold prices varied during these moments of trading today, Thursday, as they moved near the lowest level in a week with the direction of prices not yet known, as this comes under pressure from the rise in the US dollar and the rise in bond yields after strong business activity data, while investors await output numbers. US GDP and ECB policy meeting later today.
Gold is vulnerable to further decline
Gold hit its lowest level in nearly a week on Wednesday after data suggested the US economy started 2024 on a strong note, with business activity rebounding in January and inflation appearing to be easing. The preliminary reading of the industrial purchasing managers' index for January recorded 50.3 points, and expectations indicated a recording of 47.9 points, which is the same as the previous reading. While the services Purchasing Managers' Index recorded 52.9 points in the preliminary reading for January, and expectations were at 51 points, while it recorded 51.4 points in the previous reading.
“The US economy continues to defy pessimism and this allows markets to price in monetary policy easing and the risk of recession,” said Kyle Rodda, financial markets analyst at Capital.com.
The dollar index rose to hover near a six-week high, making gold priced in the US currency less attractive to holders of other currencies, while yields on benchmark 10-year US Treasury bonds were not far from a one-month high of 4.1980% touched last week. .
Given that there is still a chance of a March rate cut implicit in financial markets, strong data over the next few weeks and a possible response from the Fed at the end of its January policy meeting will make gold vulnerable to further declines, Rhoda said.
Markets are currently anticipating a 43% chance of a Fed rate cut in March. However, these expectations have been largely postponed to May with a 53% probability of policy easing, according to the US interest rate tracking tool available on the Investing Saudi website.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
Investors are now awaiting the first US GDP reading for the fourth quarter scheduled for 16:30 Saudi time, the European Central Bank's interest rate decision at 16:15 Saudi time, and personal consumption spending data on Friday.
Gold at settlement yesterday
Gold futures prices turned lower at the settlement of trading yesterday, Wednesday, as investors awaited the release of US economic data this week, to build expectations about the path of monetary policy in the United States.
Upon settlement, gold futures prices for February delivery fell by 0.5%, or $9.8, at $2,016 per ounce, the lowest level since the January 17 session, after rising earlier during trading to $2,037.9.
Gold and dollar now
Gold futures are now down 0.05% to $2,015 an ounce.
While spot gold contracts rose by about 0.1% to $2015 per ounce.
On the other hand, the dollar index rose by 0.05% to 103.08 points.
other metals
Silver rose in spot transactions 0.4 percent to $22.76 per ounce, platinum rose 0.3 percent to $901.53, and palladium gained 0.1 percent to $964.07.