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Gold prices are rising and heading for the largest monthly decline since September

  • 31 January, 2022
  • 12:20 pm EET

Gold prices are rising and heading for the largest monthly decline since September

Gold prices rose in trading on Monday, but the precious metal is heading for the largest monthly decline since last September.

This comes amid market expectations that the US Federal Reserve will raise interest rates on the back of key economic data, and the dollar’s rise has put more pressure on the yellow metal.

 

Gold Prices Today

The price of gold futures contracts – April delivery – increased by 0.16%; To reach the level of $ 1789.40 an ounce.

The yellow metal fell by 2.6%, equivalent to 47.5 dollars during trading last week, which is the worst decline since the week ending on November 26.

The spot price for the yellow metal also rose by 0.02%, to record $1,790.85 an ounce.

At the same time, the price of silver futures contracts – for March delivery – rose 0.4%, to record $22.39 an ounce.

While the spot platinum price increased by 0.16%, to record $1015.16 an ounce, while the spot palladium price rose by 0.08%, to record the level of $2409.81 an ounce.

 

Interest Rates

“The markets are only expecting 100,000-150,000 new jobs,” said Stephen Innes, managing partner at SBI Asset Management. “So if we get something higher, that will boost the potential for a 50 basis point increase in March.”

The US Federal Reserve plans to raise interest rates in March, assuming that the economy will largely move away from the fallout from the novel coronavirus ‘Omicron’ and continue to grow at healthy rates.

Although gold is a hedge against inflation, raising interest rates would raise the opportunity cost of holding non-yielding bullion.

 

Dollar Price

The dollar index hovered near an 18-month high last Friday, as traders await the upcoming RBA, UK and European meetings.

It is noteworthy that a more stable dollar makes the yellow metal more expensive for holders of other currencies.

Innes said that the possibility of a rate hike from the Bank of England could slow the US dollar’s rally further, which could put a floor on the safe haven rates.

Spot gold may also test resistance at $1,803 an ounce, according to Reuters technical analyst Wang Tao.

 

Economic Data

US data showed that the US gross domestic product grew by 6.9% in the first reading for the fourth quarter of 2021.

In total last year, the US economy grew by 5.7%, the fastest pace since 1984.

In other data, US jobless claims fell last week to 260,000, more than analysts had expected.

 

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