Gold prices inched higher yesterday as investors weighed the chances of the US Federal Reserve slowing its pace of interest rate hikes.
Spot gold was up 0.3%, at $1908.69 (R32 716) per ounce, as of 7.40am. Gold futures rose 0.2%, to $1 910.60.
Few Fed officials signalled on Wednesday that they would push on with more interest rate hikes, while Philadelphia Fed President Patrick Harker and Dallas Fed President Lorie Logan said they supported a slower pace of tightening.
Traders are mostly pricing in a 25 basis point (bp) rate hike at the Fed's January 31 to February 1 meeting. Last year, the US central bank slowed its pace of hikes to 50 bps in December after four straight 75bp increases.
Markets would see a 25 bp hike in February and rate cuts from September, and gold was enjoying the perceived less hawkish Fed, said Matt Simpson, a senior market analyst at City Index.
Lower interest rates tend to boost bullion’s appeal as they decrease the opportunity cost of holding the non-yielding asset.
“If gold can hold above $1 895, then prices will hold within the $1 900 to $1 920 range, whereas a break below $1895 signals a retracement against its bullish trend, ahead of a break above $1930,” Simpson said.
On Wednesday, data showed US producer prices fell more than expected in December, offering more evidence that inflation was receding, while retail sales fell by the most in a year, putting consumer spending and the overall economy on a weaker growth path heading into 2023.
Top consumer China’s gold output rose 13.09% year-on-year, to 372.048 tonnes, in 2022, the China Gold Association said.
Spot silver lost 0.3%, to $23.36 per ounce, platinum gained 0.1%, at $1038.64, and palladium fell 0.5%, to $1710.00.
REUTERS