Gold Gains Traction as Investors Eye Key US Inflation Data

28 Feb 2024 , 09:50 AM

While investor attention was focused on a significant U.S. inflation print and statements made this week by many Federal Reserve officials for new information on the central bank’s interest rate trajectory, gold prices increased somewhat on Wednesday as U.S. bond yields decreased.

Spot gold was up 0.1% at $2,031.99 an ounce. Futures for US gold dropped 0.2% to $2,041.00/oz.

The dollar remained stable while benchmark 10-year U.S. Treasury yields decreased to 4.2934% from 4.3150% on Tuesday, increasing the attraction of non-yielding metal.

On Tuesday, Fed Governor Michelle Bowman reaffirmed the moderate easing posture of the US central bank. She made it clear that she is not in a rush to lower rates, especially in light of the potential for inflation.

This week, at least nine more Fed officials are scheduled to speak.

According to LSEG’s interest rate probability software IRPR, traders are staking roughly 78 basis points (bps) on rate reductions in 2024, with a 61% probability that the first quarter-point (25 bps) cut would occur in June. Investing in non-yielding bullion is more appealing when interest rates are lower.

According to data released on Tuesday, U.S. durable goods orders had their worst decline in over four years in January. In February, consumer confidence in the US also declined.

Markets are now waiting for the core personal consumption expenditures (PCE) price index, the U.S. Federal Reserve’s preferred inflation measure, to be released on Thursday.

Leading buyer of bullion According to official figures released on Tuesday, China’s monthly net imports of gold through Hong Kong increased 51% in January to reach a record high since mid-2018.

Spot silver increased 0.1% to $22.46/Oz, spot platinum increased 0.2% to $890.25/Oz, and palladium increased 0.1% to $937.02/Oz.

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