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Gold steady ahead of US economic data

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Spot gold dropped 0.1% to $2,026.39 per ounce and U.S. gold futures dropped 0.1% to $2,028.00

Gold prices were little changed on Monday, as traders cautiously awaited fresh data on the U.S. economy and the Fed’s preferred inflation gauge due later this week, leading up to the central bank’s interest rate decision next week.

Spot gold dropped 0.1% to $2,026.39 per ounce by 0348 GMT. U.S. gold futures dropped 0.1% to $2,028.00.

Bullion dropped nearly 1% last week – its biggest weekly drop in six.

Last week, Federal Reserve officials said that it needs more inflation data in hand before any rate cut judgment could be made and that the baseline for cuts to start was in Q3.

The remarks came on the heels of improved U.S. consumer sentiment, solid labour market and retail sales data that suggested the economy remained resilient.

The odds of a Fed rate cut in March have declined to 49% from nearly 71% two weeks ago, as per LSEG’s interest-rate probability app IRPR.

The U.S. dollar index dropped 0.1%, while yields on benchmark U.S. 10-year Treasury notes slid from a more than a month high to 4.1111%.

Investors will be watching out for U.S. flash purchasing managers’ index (PMI) report on Wednesday, fourth-quarter advance GDP estimates due on Thursday and personal consumption expenditures (PCE) data on Friday.

If personal consumption expenditures inflation treads higher than the headline CPI report, I suspect USD bears will continue to cover, to strengthen the dollar, and cap gold’s upside potential, said Matt Simpson, a senior analyst at City Index.

Meanwhile a pickup in PMI will strengthen the case for fewer Fed cuts and further push back expectations for the first cut, Simpson said.

Spot silver dropped 0.2% to $22.55 per ounce, platinum was steady at $898.95, and palladium dropped 0.1% to $945.88.

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