Dollar & Debt Up, Gold Gets Gloomy

16 Jan 2024 , 09:13 AM

Tuesday saw a modest decline in gold prices as the US dollar and Treasury yields increased. Investors are waiting for more clarity on the Federal Reserve’s interest rate trajectory from the speeches the central bank will be giving this week.

Spot gold was down 0.2% at $2,050.35 an ounce. Futures for US gold increased by 0.1% to $2,054.10.

Bondholders with foreign currencies found bullion less appealing as the dollar index surged to a 10-day high and the yields on the benchmark U.S. 10-year Treasury note approached 4%.

Following its meeting on January 30-31, the Fed is anticipated to maintain its current policy rate.

According to LSEG’s interest rate probability software, IRPR, traders are betting on six rate cuts of 25 basis points apiece (bps) this year, with a roughly three-in-four likelihood that the first one might occur as soon as March.

Interest rate reductions add to the allure of non-yielding bullion.

This week, a number of Fed officials are expected to speak. Fed Governor Christopher Waller is slated to talk at the Brookings Institution at 1600 GMT on the state of the economy.

Officials at the European Central Bank resisted the market’s expectations that rates would drop quickly this year.

For the 12th straight month, Japan’s wholesale inflation rate was flat in December compared to a year earlier, supporting the central bank’s belief that the cost-push pressure brought on by growing raw material prices will eventually lessen.

The Houthi movement in Yemen has promised to continue its attacks following American and British raids on its locations in the country, and it has now expanded its objectives in the Red Sea region to include American ships, an official from the Iran-allied organization said on Monday.

Palladium dropped 0.3% to $968.96, platinum slid 0.4% to $911.59, while spot silver decreased 0.2% to $23.15 per ounce.

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