Gold prices fell in trading today, Thursday; Investors are cautiously awaiting US inflation data that may provide new clues about the pace of monetary tightening by the Federal Reserve.
And gold prices ended their trading on the rise, yesterday, Wednesday; To continue rising for the fourth consecutive session, with the US dollar falling.
Gold Prices Today
The price of gold futures contracts – April delivery – decreased by 0.22%; To reach the level of $ 1832.50 an ounce.
The spot price for the yellow metal also decreased by 0.03%, to record $1,832.63 an ounce.
At the same time, the price of silver futures contracts – for March delivery – decreased by 0.03%, recording $23.34 an ounce.
The spot platinum price also fell by 0.58% at $1025 an ounce, while the spot palladium price rose by 0.50%, to record $2,285.23 an ounce.
“I think the dollar will weaken despite higher yields because every other central bank is raising interest rates to defend against inflation,” said Stephen Innes, managing partner at SBI Asset Management.
He added, “If the US Federal Reserve starts raising rates too quickly, that’s not good for the economy, especially with every other central bank doing the same in unison. In that sense, gold can actually be a good hedge in the long run.”
US Inflation Data
The US CPI for January, due to be released later today, is likely to have risen 7.3% annually, which would be the largest such increase since 1982.
A strong inflation reading is expected to polish gold’s appeal as an inflation hedge, but higher interest rates would raise the opportunity cost of holding non-yielding bullion.
US Bond Yields
“If we look at the 10-year and 2-year bond yields, the spread is narrowing slowly, which is why people don’t expect growth any longer,” said Jigar Trivedi, commodities analyst at Mumbai-based Anand Rathi brokerage.
He added, “This is why the 10-year bond yield has fallen so sharply, and this supports the rise in gold prices,” Reuters reported.
Yields on the benchmark 10-year US Treasury have eased from their November 2019 highs reached earlier in the week, while the dollar has stabilized.