Gold lacks direction as investors wait for additional data to provide Fed rate cues

26 Sep 2023 , 10:44 AM

As the U.S. dollar and Treasury yields rose on Tuesday, gold prices began to drift lower as investors awaited a crucial consumer inflation report for additional hints on whether the Federal Reserve will raise interest rates once more this year.

Spot gold was down 0.1% to $1,914.61 per ounce, while U.S. gold futures were down 0.2% to $1,933.30.

The benchmark 10-year Treasury yields increased to a new 16-year high, while the dollar reached a 10-month high.

Wall Street managed to rise in the volatile market on Monday as investors continued to analyse central bank signals from the previous week that interest rates would remain higher for longer.

According to forecasts released on Wednesday, the majority of Fed policymakers expect one more rate increase in the next three months, but investors still only assign a 50% likelihood to further tightening in 2023.

Non-interest-paying bullion, which is valued in dollars, is negatively impacted by rising interest rates.

Christine Lagarde, president of the European Central Bank, reiterated the bank’s advice on Monday, which neither promises nor excludes more rate increases, and suggested that the record-high deposit rate could help reduce inflation to 2%.

According to a study, business morale in Germany marginally declined in September, declining for the fifth consecutive month and highlighting recession risks in the euro zone’s biggest economy.

According to rating agency Moody’s, a U.S. government shutdown would be bad for the nation’s credit.

The Federal Reserve’s favoured inflation indicator, the personal consumption expenditures (PCE) price index, will be released on September 29.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust GLD, said that its holdings dropped 0.1% on Monday to their lowest level since January 2020. 

Silver prices on the spot market decreased by 0.1% to $23.09 per ounce, platinum lost 0.3% to $908.69, and palladium dropped by 0.1% to $1,228.31.

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