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Gold hovers above $2 000, focus on Fed outlook

17th April 2023

By: Reuters

  

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Gold continued to hold above the key $2 000 level on Monday, undeterred by the previous session's correction, while investors assess the US Federal Reserve's interest rate hike trajectory.

Spot gold was up 0.2% to $2 007.17 per ounce at 1055 GMT, while US. gold futures GCv1 were 0.3% higher at $2 021.10.

Friday's price correction hasn't affected the positive trend for gold, said Carlo Alberto De Casa, external analyst at Kinesis Money, adding that despite the profit-taking, the $1 980/oz to $2 000 zone was promising support for the metal.

Gold dropped 2% on Friday after the dollar bounced and Fed officials flagged the need for another interest rate hike.

Fed Governor Christopher Waller and Atlanta Fed President Raphael Bostic suggested the Fed could hike another 25 basis points (bp) next month.

The CME FedWatch tool shows markets are pricing in a 86% chance of a 25 bp hike in May.

The US producer price index (PPI) fell by the most in nearly three years last month, coming a day after inflation data pointed to moderation in consumer prices.

Rising interest rates reduce the appeal of non-yielding bullion.

Limiting gold's upward momentum, the dollar index =USD was 0.1% higher, making bullion more expensive for overseas buyers, and benchmark Treasury yields were at their highest in two weeks. 

"Gold also maintains a strong correlation with real yields, and price action continues to be sensitive to US inflation and employment data," Standard Chartered analyst Suki Cooper said in a note.

Commentary from European Central Bank (ECB) officials including President Christine Lagarde will be on investors' radar this week, along with speeches by New York Fed President John Williams and Cleveland Fed President Loretta Mester.

Spot silver XAG= rose 0.3% to $25.42 per ounce, platinum XPT= was up 0.2% to $1 046.68 and palladium XPD= fell 0.4% to $1 498.04.

Edited by Reuters

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