Gold prices rise in early trade

19 Apr 2023 , 09:37 AM

On Wednesday, gold prices increased slightly thanks to a weaker US dollar as traders evaluated the likelihood that the Federal Reserve will only increase interest rates one more time in May, before taking a break.

Spot gold was up 0.1% at $2,006.09 per ounce. To $2,018.20, U.S. gold futures declined by 0.1%.

Due to a modest decline in the dollar index, gold became more affordable for buyers using foreign currencies.

According to recent data showing sustained inflation while the overall economy appears set to continue growing, even if slowly, the U.S. central bank should keep raising interest rates, according to James Bullard, president of the St. Louis Fed.

Raphael Bostic, president of the Atlanta Fed, however, stated that the U.S. central bank likely has one more rate increase in store for it.

Markets are pricing in an 83.2% possibility of a 25 basis-point raise in May, according to the CME FedWatch tool.

Although increasing interest rates reduce the appeal of the non-yielding asset, gold is nevertheless regarded as a hedge against inflation and economic uncertainty.

In the meantime, the chief economist of the European Central Bank (ECB) supported another rate increase at the ECB’s upcoming meeting but stated that its size will rely on new data, particularly a survey of euro zone banks.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, reported that its holdings decreased 0.16% on Tuesday to 924.25 tonnes from 925.70 tonnes on Monday.

Spot silver increased by 0.1% to $25.23 per ounce, platinum decreased by 0.1% to $1,081.66, and palladium increased by 1.2% to $1,627.03.