As the US currency and rates retreat from recent highs, gold remains stable

9 Aug 2023 , 09:14 AM

As bond yields and the dollar fell on Wednesday, a day before the release of U.S. consumer pricing data that may support or contradict further interest rate increases, gold prices recovered from one-month lows.

On Tuesday, spot gold fell to its lowest price since July 10 at $1,922 per ounce. It was later up 0.1% at $1,926.29 per ounce. At $1,960.30, U.S. gold futures were unchanged.

On Tuesday, when Moody’s lowered its credit ratings on a number of small- to mid-sized U.S. banks, the dollar index retreated off its highs from the previous session and longer-dated U.S. Treasury yields decreased. 

Bank stocks in the U.S. and Europe fell as investors once again expressed concern about the industry’s health in the wake of Moody’s downgrading numerous U.S. lenders and Italy’s approval of a sudden 40% windfall tax on its bankers. Due to businesses’ steep reductions in purchases of capital goods built abroad, imports in June fell to their lowest level in more than 1-1/2 years, significantly reducing the U.S. trade imbalance.

According to Thomas Barkin, president of the Richmond Fed, there is still time for Federal Reserve officials to analyze data and determine whether or not additional rate rises are necessary.

While Philadelphia Fed President Patrick Harker stated that absent any unexpected changes in the direction of recent economic statistics, the U.S. central bank may be at a point where it can leave interest rates where they are.

In the midst of an unprecedented global decoupling in the direction of interest rates, investors are anticipating gains in emerging market stocks and a cooling of their currencies.

On Tuesday, Barrick Gold Corp outperformed analysts’ projections for second-quarter profit as the Canadian gold miner benefited from rising gold prices.

Platinum slipped 0.2% to $898.15 while spot silver increased 0.2% to $22.79 per ounce. Up 0.4% to $1,225.39, palladium.

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