Gold Holds Its Breath: Inflation Data Looms Large

8 Jan 2024 , 09:30 AM

Monday’s steady gold price came after last week’s conflicting U.S. economic data left traders searching for further hints regarding the scope and speed of the Federal Reserve’s interest rate reductions. Now, traders’ attention is focused on a crucial inflation print that is scheduled for later this week.

Spot gold fell for the week on Friday, although it was steady at $2,044.49 an ounce.The ounce of U.S. gold futures increased by 0.1% to $2,051.10.

Due to the holiday-induced closure of the Japanese market, trading in Asia was light.

The dollar index remained stable as well, having closed Friday at its highest level since July 2023. This increased the cost of bullion for holders of other currencies, while the benchmark yield on the 10-year U.S. Treasury remained over 4%.

According to official data, U.S. firms employed more workers in December than anticipated; yet, secondary data from the Institute for Supply Management (ISM) suggested that the services industry slowed down significantly in the same month.

The CME FedWatch tool indicates that market players are pricing in a roughly 64% possibility of a rate drop by the US Federal Reserve in March. Data released on Friday indicated that in the week leading up to January 2, COMEX gold speculators increased their net long position by 2,009 contracts to 137,516.

Data released on Friday indicated that in the week leading up to January 2, COMEX gold speculators increased their net long position by 2,009 contracts to 137,516.

Physically speaking, as domestic prices declined from all-time highs last week, gold purchases increased in India, a big consumer.

Investors are now waiting for more guidance on the timing of the Fed’s rate cut in response to Thursday’s U.S. consumer price inflation report.

Spot silver was little changed at $23.17 per ounce, while palladium rebounded from a nine-session decline to gain 0.3% to $1,030.28 and platinum increased 0.3% to $963.24.

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