Gold prices held steady on Monday, following a marginal 0.1% gain in the previous week. Investors were carefully evaluating statements from U.S. Federal Reserve officials, which hinted at further interest rate hikes. All eyes are now on the upcoming consumer inflation gauge scheduled for later this week.
Here are the key factors driving the gold market:
Spot gold remained mostly unchanged at $1,924.54 per ounce by 0051 GMT, while U.S. gold futures dipped 0.1% to $1,944.30.
The U.S. dollar continued to hover near its six-month high, and benchmark 10-year Treasury yields remained close to their 16-year peak.
Federal Reserve officials conveyed their concerns on Friday, suggesting that more rate hikes could be in the pipeline despite their decision to keep the benchmark rate steady last week. Three policymakers expressed uncertainty about whether the battle against inflation has been won.
The prospect of higher interest rates tends to discourage investments in non-interest-bearing assets like gold, particularly as the metal is priced in dollars.
A survey published on Friday revealed little change in U.S. business activity for September. Concurrently, another survey indicated that the euro zone economy might contract in the current quarter and may not return to growth anytime soon.
Investors are eagerly awaiting the release of the Personal Consumption Expenditures (PCE) price index, which is the Federal Reserve’s preferred inflation gauge, scheduled for September 29.
In addition to inflation data, attention is focused on Washington, where U.S. lawmakers are engaged in negotiations over a spending bill. A potential government shutdown looms if an agreement is not reached before the September 30 deadline.
The Bank of Japan, in its recent announcement, maintained ultra-low interest rates and reiterated its commitment to achieving sustainable inflation at the 2% target.
U.S. equity funds experienced significant outflows in the week ending September 20, driven by concerns about prolonged restrictive monetary policies.
The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported that its holdings fell to their lowest level since January 2020.
In the precious metals market:
Spot silver registered a slight 0.1% increase, reaching $23.55 per ounce.
Platinum saw a 0.2% decline, settling at $924.78.
Palladium recorded a 0.2% gain, reaching $1,251.35.
Key economic events for the day include:
0800 GMT: Release of Germany’s Ifo Business Climate, Current Conditions, and Expectations data.
