Gold steady amid dollar-yield tussle
Gold prices remained stable on Wednesday, as the impact of a stronger dollar was somewhat balanced by lower US Treasury yields. Traders are now waiting for crucial inflation data and comments from Federal Reserve officials this week to determine when the US central bank might likely reduce rates, Reuters reported on Wednesday.
As of 0643 GMT, spot gold remained steady at $2,030.12 per ounce, while US gold futures experienced a slight drop of 0.2 per cent, bringing them to $2,039.40 per ounce. The benchmark 10-year US Treasury yields saw a decrease, moving from 4.3150 per cent on Tuesday to 4.2855 per cent, even as the dollar index recorded a 0.2 per cent increase.
Luca Santos, an analyst at ACY Securities, suggested that the upcoming PCE report and GDP data could potentially trigger a breakout for gold from its current trading range of $2,020 to $2,050.
On Tuesday, data revealed that US durable goods orders experienced the most significant decline in almost four years in January, and US consumer confidence also decreased in February.
Currently, the markets are anticipating the release of US GDP data at 1330 GMT, while the Federal Reserve’s preferred inflation measure, the core PCE price index, is set to be released on Thursday.
Amid potential inflation risks, Fed Governor Michelle Bowman highlights the US central bank’s cautious approach to easing, while traders predict a 63 per cent chance of an initial quarter-point cut in June 2024, coinciding with speeches from at least nine other Fed officials this week.
Lower interest rates enhance the appeal of holding non-interest-bearing gold, and according to Reuters market analyst Wang Tao, spot gold may revisit the $2,025 per ounce support level, potentially declining further to $2,015 if it falls below this threshold.
Meanwhile, spot platinum saw a 0.3 per cent decrease to $885.60 per ounce, palladium declined nearly 1 per cent to $927.04, and silver dipped slightly by 0.1 per cent to $22.40.
