Gold prices went down on Thursday amidst a firmer US dollar and elevated treasury yields, with traders expecting more US economic data which might give hints about rate cuts by the Federal Reserve by mid-year, Reuters reported.
Spot gold and US gold futures both dipped by 0.2 per cent to $2,171.05 and $2,175.40 per ounce, respectively, at 0426 GMT; meanwhile, the US dollar index rose by 0.1 per cent, rendering gold more expensive for holders of other currencies.
Investors are waiting for US retail sales data, the PPI report, and jobless claims due later today to assess the health of the US economy and its potential impact on the Fed’s decision to cut rates in June.
Kelvin Wong, a senior market analyst for Asia Pacific at OANDA, referred to a slight pullback in gold prices following the release of US CPI data. However, he believes that if today’s PPI data aligns with expectations, it could continue to support gold prices.
According to LSEG’s interest rate probability app, traders now predict a 67 per cent likelihood of a June rate cut, down from 72 per cent before inflation data indicated some persistence.
The Fed plans to unveil its latest ‘dot plot’ projections at next week’s policy meeting, with the December meeting forecasting three-quarter-point rate cuts for 2024.
Nicholas Frappell, global head of institutional markets at ABC Refinery, identified potential catalysts for gold price movements, including further negative developments in China’s housing market and local government funding mechanisms and consumer demand trends.
He anticipates that official sector demand will continue to bolster gold prices this year. Meanwhile, spot platinum, palladium, and silver prices fell by 0.3 per cent to $935.50, $1,056.24, and $24.95 per ounce, respectively, after reaching a more than four-month high earlier in the session.
