Gold treads water as spotlight shifts to US Fed Reserve meeting

Gold prices edged up on Monday on a weaker dollar, as investor attention moved to central bank meetings this week for clarity on their rate hike strategies

gold
Photo: Andrey Rudakov/Bloomberg
Reuters
2 min read Last Updated : Jan 30 2023 | 9:52 PM IST

By Seher Dareen

(Reuters) - Gold prices edged up slightly in choppy trade on Monday as investors looked ahead to the U.S. Federal Reserve policy meeting this week amid expectations of a slowdown in rate hikes.

Spot gold was up 0.1% to $1,928.39 per ounce by 10:28 a.m. ET (1528 GMT). U.S. gold futures were down 0.2% to $1,926.70.

"The way that the Fed pitches that story will reflect in the gold market," said Daniel Pavilonis, senior market strategist at RJO Futures.

"The bigger picture here is that if the Fed slows down on rates, inflation comes roaring back. If the Fed pauses for a little bit and inflation is still there - I think in that scenario gold would take off."

The rate increase expected at the Federal Open Market Committee's Jan. 31-Feb. 1 meeting - 25 basis points - would bring the policy rate to the 4.5%-4.75% range, short of the 5% plus level most Fed policymakers were vouching for.

Gold, which pays no interest, tends to benefit when interest rates are low as it reduces the opportunity cost of holding bullion.

Expectations for a slowdown in Fed rate hikes grew after the Fed's preferred inflation gauge - U.S. consumer spending - fell for a second-straight month in December, putting the economy on a lower growth path heading into 2023.

However, the number of people filing for jobless benefits keeps dropping - signalling a tight labour market that could force the Fed to keep hiking rates.

Meanwhile, benchmark U.S. 10-year bond yields were hovering near two-week highs, limiting gold's rise. [US/]

Investors are pricing in a 50 bps rate hike from the Bank of England and the European Central Bank, which also have policy meetings this week.

Spot silver rose 0.6% to $23.71 per ounce, platinum was down 0.1% to $1,010.99, while palladium gained 0.8% to $1,631.34.

 

(Reporting by Seher Dareen in Bengaluru; Editing by Christina Fincher)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

More From This Section

Topics :Gold PricesUS Fed rate hikeUS Federal ReserveFed meet

First Published: Jan 30 2023 | 9:51 PM IST

Next Story