👀 Ones to watch: The MOST undervalued stocks to buy right nowSee Undervalued Stocks

Gold pulls back as dollar advances ahead of Fed meeting

Published 01/31/2023, 08:30 AM
© Reuters.
XAU/USD
-
XAG/USD
-
GC
-
HG
-
SI
-
PL
-
DXY
-

By Ambar Warrick

Investing.com -- Gold prices retreated on Tuesday, coming under pressure from a stronger dollar as caution kicked in ahead of a Federal Reserve meeting this week, while broader metal markets also ticked lower.

The yellow metal marked a slow start to the week ahead of the conclusion of a two-day Fed meeting on Wednesday, where the bank is widely expected to raise interest rates by 25 basis points.

But its outlook on monetary policy will be a key point of focus, as recent economic data from the U.S. suggested that the central bank may have enough headroom to raise interest rates further.

Spot gold fell 0.1% to $1,922.10 an ounce by 18:59 ET (23:59 GMT), while gold futures were muted around $1,921.75 an ounce.

The spot price overtook the futures price ahead of the upcoming expiry of the futures contract, indicating that near-term demand for gold was still strong.

The yellow metal staged a stellar rally through late-2022 and early-2023 as softer inflation readings from the U.S. drummed up expectations that the Fed will hike interest rates at a slower pace in 2023.

But given that inflation is still well above the Fed’s annual target, markets remained uncertain over where U.S. borrowing rates will peak. The Fed has also warned that stubborn inflation could result in rates remaining higher for longer.

The dollar recovered against a basket of currencies this week, also putting some pressure on metal markets.

A mix of elevated interest rates and high inflation is expected to weigh on economic growth this year, raising the risk of a recession in major economies. Gold has also benefited from safe haven demand on this notion.

Fourth-quarter economic growth data from the euro zone, due later in the day, is also expected to shed more light on the prospect of a recession. But anticipation of the Fed meeting saw investors shift to the dollar as their preferred safe haven.

Platinum futures were flat at $1.017.15 an ounce, while silver futures fell 0.3% to $23.668 an ounce.

Among industrial metals, copper prices were dented by a stronger dollar and fears of a recession.

High-grade copper futures were flat around $4.1833 a pound after tumbling over 1% in the prior session.

Prices of the red metal took little support from the prospect of disrupted supply from world no.2 copper producer Peru, which is facing increased civil unrest after the ouster of President Pedro Castillo.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.