Gold prices saw a slight increase on Monday, despite a previous drop caused by higher U.S. inflation data that reduced expectations for early rate cuts by the Federal Reserve. The softer dollar helped lift gold prices as well.
The article reports that spot gold was up 0.2% at $2,017.77 per ounce, after experiencing a 0.5% decrease the previous week. Additionally, U.S. gold futures edged 0.3% higher to $2,029.80 per ounce. The decline in the dollar index by 0.1% contributed to making greenback-priced gold more affordable to overseas buyers.
While gold had initially fallen to a two-month low due to higher consumer prices, it managed to recover some of its losses after U.S. retail sales dropped more than expected in January. Federal Reserve Bank of Atlanta President Raphael Bostic expressed interest in lowering rates at some point in the next few months, depending on data to convince him that inflation pressures are falling.
The article highlights that traders have adjusted their expectations of a U.S. interest rate cut from March to June, with markets currently pricing a 77% chance of a cut in June, according to the CME Fed Watch Tool. The President’s Day holiday kept most U.S. markets closed on Monday.
Spot platinum fell 0.2% at $904.27 per ounce, palladium rose 1.2% at $960.76, while silver was down 0.2% at $23.35 per ounce.
Additional insight: The fluctuation in gold prices reflects the uncertainty surrounding the U.S. economic outlook and the Federal Reserve’s monetary policy. Investors are closely monitoring factors such as U.S. inflation, retail sales, and statements from Fed officials to gauge the potential impact on interest rates and the overall demand for gold. Uncertainty about the timing of rate cuts and the economic recovery from the COVID-19 pandemic could lead to continued volatility in the gold market in the coming months.
