Gold rises in early trade as the dollar weakens

13 Apr 2023 , 08:28 AM

As U.S. inflation statistics came in lower than anticipated and the currency softened, gold prices edged up on Thursday, raising the possibility that the Federal Reserve may hold off on hiking rates after a potential hike in May.

U.S. gold futures increased by 0.4% to $2,032.50, while spot gold increased by 0.1% to $2,017.19 per ounce.

The dollar index fell by 0.1%, lowering the price of bullion for customers using other currencies.

On Wednesday, gold prices increased by more than 1% after statistics revealed that the U.S. Consumer Price Index increased by 0.1% last month, against expectations of a 0.2% increase, after rising by 0.4% in February.

Markets are pricing in a 70.4% chance of a 25 basis-point rise in May, according to the CME FedWatch tool, although rate decreases are expected in the second half of the year.

Although gold is regarded as a hedge against inflation, the appeal of non-yielding bullion is declining as interest rates rise.

While the Fed still had ‘more work to do’ on rate hikes, San Francisco Fed Bank President Mary Daly said on Wednesday that tighter lending conditions might warrant a hold.

Thomas Barkin, president of the Richmond Fed, said that because the most recent reports on price pressures were not sufficiently weak, the Fed still needed to do more to bring inflation down to its 2% objective.

Following a projection from Fed staff that stress in the banking sector would push the economy into recession, some officials discussed suspending rate rises, according to the minutes from the Fed’s March meeting, but ultimately decided that high inflation remained the top priority.

Spot prices for palladium increased by 0.5% to $1,466.82, platinum increased by 0.2% to $1,017.30, and silver increased by 0.1% to $25.51 per ounce.

For feedback and suggestions, write to us at [e-mail]