Gold prices decline in early trade

3 Apr 2023 , 08:49 AM

On Monday, gold prices declined as a strong dollar made the commodity more expensive to purchasers using other currencies.

Spot gold was down 0.3% at $1,962.36 per ounce. In addition, U.S. gold futures dropped 0.3% to $1,980.10.

The dollar index increased by 0.3%. 

Oil prices spiked on Monday following an unexpected round of supply cuts by Saudi Arabia and other OPEC+ oil producers, a potentially worrying indication for global inflation only days after a drop in U.S. pricing data had increased market optimism.

Although inflation slowed down in February, it remained high enough for the Federal Reserve to perhaps hike interest rates one more time this year despite the modest increase in consumer spending in the United States.

As interest rates are raised to reduce inflation, it becomes more expensive to hold non-yielding bullion.

According to the CME FedWatch tool, markets expect the Fed to increase rates by a quarter point in May.

Fed Board Governor Lisa Cook stated on Friday that she is closely monitoring credit conditions and would take recent banking sector upheaval into account when determining the appropriate level of interest rates to combat high and persistent inflation.

Fed Bank of New York President John Williams stated on Friday that the future of central bank interest rate policy will be heavily influenced by how the financial circumstances develop.

Spot silver fell by 0.7% to $23.91 an ounce, platinum fell by 0.5% to $986.39, and palladium increased by 0.1% to $1,461.80.

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