Gold prices decline in early trade

3 Mar 2023 , 08:56 AM

The Federal Reserve may continue raising interest rates if the labour market remains tight, which would support the currency and Treasury yields and push down gold prices on Thursday.

After three days of gains, spot gold was down 0.1% at $1,835.03 per ounce.

U.S. gold futures ended the day at $1,840.50, down 0.3%. According to earlier data, fewer Americans filed new unemployment claims last week.

Due to the 0.6% increase in the dollar index, gold became more expensive for holders of other currencies.

Benchmark The 10-year Treasury yields in the United States were close to their highest level since early November 2022, which put pressure on bullion because it pays no interest. 

Investors may get more hints about the direction of rates from the consumer price data released the following week before the Fed’s meeting on March 21–22, where it is anticipated to raise rates by 25 basis points.

To control inflation that was far higher than the Fed’s 2% target, U.S. central bank officials are divided on whether higher interest rates are required or if a tight monetary policy can be maintained for a longer period of time.

In other countries, statistics earlier in the week from Spain, France, and Germany showed that inflation remained sticky, and the European Central Bank seemed inclined to maintain its hawkish stance.

Spot silver decreased 0.8% to $20.83 per ounce, platinum increased 0.7% to $961.43, and palladium increased by 0.1% to $1,442.05 per ounce.

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