According to Reuters, after data revealed hints of slowing inflation in the US, gold prices rose on Tuesday as the dollar fell, confirming predictions the Federal Reserve could adhere to a cautious rate-hiking path.
Today’s price movements of metal commodity
By 10:06 a.m. ET (1506 GMT), spot gold XAU= increased 0.5% to $1,863.27 per ounce, while U.S. gold futures GCv1 increased 0.1% to $1,864.70.
Spot silver XAG= decreased by 0.1% to $21.96 an ounce, while platinum XPT= increased by 0.2% to $955.23 and palladium XPD= remained constant at $1,565.81.
Key factors affecting commodity market prices
The U.S. consumer price index (CPI) increased 6.4% in the year ending in January, which is the smallest increase since October 2021, according to data. However, the CPI grew by 0.5% last month after increasing by 0.1% in December, as anticipated.
According to the Director of Metals trading at High Ridge Futures, “The market was quite volatile on the back of the CPI data…but as you dig into the numbers, we did see headline CPI come down but clearly not as much as expected,” said David Meger.
The dollar index DXY was down 0.2% after hitting a more than one-week low earlier in the day, which made gold bullion priced in dollars more affordable for buyers using foreign currencies.
The opportunity cost of owning the zero-yield asset increases due to bullion’s extreme sensitivity to rising U.S. interest rates, despite the fact that it is seen as an inflation hedge.
Projections on rising interest rates, labor market, inflation situation and natural disaster recently
According to Phillip Streible, chief market strategist at Blue Line Futures in Chicago, the question of how long the Fed could keep raising interest rates was still open to debate because doing so beyond what was necessary may have a negative impact on the economy.
Interest rates are expected to peak at 5.2% by July according to money market traders, who have priced in at least two additional 25 basis point rate increases this year. FEDWATCH
A strong labor market and a slower rate of increase in the Eurozone’s GDP during the last three months of 2022 kept the region’s GDP growth in positive territory.
Additionally, as part of an emergency measure to lessen the effects of the two earthquakes that struck Turkey last week on the economy, Turkey will suspend some gold imports.
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