Gold Prices Remain Unchanged as US Economic Data Suggests Slowing Inflation
Spot gold remained largely unchanged on Monday (Dec 23) in light trading after gaining on an overall softer US dollar and Treasury yields on Friday, when US economic data hinted at a slowdown in inflation.
US Economic Data
Data on Friday showed monthly inflation in the US slowed in November after little improvement in recent months. The personal consumption expenditures index rose 0.1 per cent last month after an unrevised 0.2 per cent gain in October.
Federal Reserve
San Francisco Federal Reserve president Mary Daly and two other Fed policymakers on Friday said they felt the central bank would likely resume rate cuts next year but take their time given that the “recalibration phase” was over.
Russian Central Bank
The Russian central bank kept key interest rate on hold at 21 per cent on Friday to surprise the market, which had expected a two-percentage-point increase, and said that the recent tightening created conditions for inflation to fall towards its target.
Impact on Gold Prices
Higher rates dull non-yielding bullion’s appeal.
Comex Gold Speculators
Meanwhile, Comex gold speculators cut net long position by 16,251 contracts to 203,937 in the week to Dec 17, data showed on Friday.
Regional Markets
In India, gold’s demand remained subdued last week as volatile prices prompted potential buyers to delay purchases, while higher rates in China are expected to potentially offset upcoming seasonal demand.
Other Precious Metals
Spot silver climbed 0.3 per cent to US$29.59 per ounce and platinum rose 0.4 per cent to US$929.83, while palladium eased 0.9 per cent to US$912.21.
Conclusion
In conclusion, the US economic data suggesting a slowdown in inflation and the Federal Reserve’s cautious stance on interest rates have had a mixed impact on gold prices. While the Fed’s decision to keep interest rates unchanged has supported gold prices, the overall trend of higher rates has weighed on the metal’s appeal.
FAQs
Q: What is the current price of spot gold?
A: The current price of spot gold is US$2,621.19 per ounce.
Q: What is the impact of higher interest rates on gold prices?
A: Higher interest rates dull non-yielding bullion’s appeal, making it less attractive to investors.
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