Gold holds steady as investors await inflation data and Fed action

13 Jun 2023 , 11:08 AM

Tuesday saw a little increase in gold prices after the dollar weakened, but the gains were modest as traders awaited the release of U.S. inflation statistics and the Federal Reserve’s interest rate decision.

Spot gold was up 0.1% at $1,959.23 per ounce. Futures for U.S. gold increased 0.2% to $1,973.40.

The U.S. dollar weakened by 0.1%, enticing foreign buyers with bullion priced in US dollars.

Economists surveyed by Reuters predict the consumer price index for May to show a slowing rise in inflation on a year-over-year basis to 4.1% from the reading of 4.9%, with a monthly gain of 0.2%, down from a 0.4% rise the prior month.

According to CME’s Fedwatch tool, markets expect the Fed to hold interest rates constant 79.2% of the time.

The opportunity cost of storing non-yielding gold increases as interest rates rise.

On Thursday and Friday, respectively, the European Central Bank and the Bank of Japan will announce their rate decisions. Ahead of this week’s Federal Reserve policy meeting, many bond investors are maintaining a defensive posture in managing their portfolios as they prepare for the end of the monetary policy tightening cycle this year and potential interest rate decreases in 2024.

Asian investors are waking up to another positive session in global stocks on other markets.

Warning flags for global markets, which are glad that the March banking turbulence did not result in a full-fledged credit crunch and that a U.S. debt ceiling crisis was avoided, include the euro zone’s recession and China’s disappointing data.

Spot silver increased by 0.1 percent to $24.0786 per ounce, platinum increased by 0.3 percent to $992.58, and palladium increased by 0.3 percent to $1,353.84.

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