Ahead of US inflation data this week, gold declines from a five-month top

23 Oct 2023 , 09:42 AM

Before important inflation and economic growth figures expected later this week, demand for gold was reduced by strong U.S. Treasury yields, which caused prices of the non-yielding metal to fall on Monday and retreat from a five-month top reached in the previous session.

Spot gold was down 0.8% to $1,965.89 per ounce, while U.S. gold futures had fallen 0.9% to $1,977.10.

Gold prices rose for the second week in a row on Friday, reaching their highest level since mid-May as investors chose the security of bullion over the Middle East crisis.

Demand for gold, which has no interest yield, has decreased as a result of the persistent selling of US government bonds, which has raised Treasury yields to their highest point in over 15 years.

The Federal Reserve’s preferred inflation indicator, the U.S. PCE price index, the country’s third-quarter GDP numbers, the European Central Bank’s rate decision, and worldwide flash PMIs will be of particular interest to investors this week.

Raphael Bostic, the president of the Atlanta Fed, stated on CNBC on Friday that although inflation is still too high, it is beginning to decline in light of growing signs of an economic slowdown, which may pave the way for looser monetary policy later in 2019.

China will support a long-term economic recovery, guarding against financial risks and concentrating on growing domestic demand, according to a report released on Saturday by Governor Pan Gongsheng of the People’s Bank of China.

The largest exchange-traded fund backed by gold in the world, SPDR Gold Trust, reported 1.8% gains in its holdings on Friday.

In the week leading up to October 17, COMEX gold speculators moved to a net long position of 41,867 contracts, adding 56,655, according to data released on Friday.

While top consumer China experienced a tiny decline in premiums, physical gold dealers in India were forced to provide greater discounts last week as a surge in domestic prices dampened demand ahead of a major festival.

Spot silver dropped 1.2% to $23.07 per ounce, palladium dropped 0.1% to $1,096.58, and platinum dropped 0.7% to $888.61.

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