Holding steady against the weaker dollar, gold is watched for US inflation statistics

19 Dec 2023 , 09:58 AM

Thanks in part to a declining dollar, gold prices remained stable on Tuesday as investors awaited additional U.S. economic data this week that may provide insight into the Federal Reserve’s monetary policy stance amidst soaring market expectations of interest rate reductions.

Spot gold was unchanged at $2,027.15 an ounce. At $2,040.90, U.S. gold futures remained flat.

Due to the dollar’s 0.1% decline vs its competitors, gold became more affordable for holders of other currencies.

The Fed gave a hint this week that the historic monetary policy tightening that had been implemented over the previous two years is coming to an end and that lower borrowing costs will be arriving in 2024.

Chicago Fed President Austan Goolsbee stated on Monday that the Fed is not pre committing to lowering interest rates quickly, and the surge in market expectations that it will is inconsistent with the U.S. central bank’s operations.

According to the CME FedWatch tool, markets are currently pricing in a roughly 69% possibility of a rate drop by the Fed in March. Non-interest bearing bullion is typically supported by lower interest rates.

This week, investors will be watching a number of U.S. economic reports. The Fed’s favoured gauge of underlying inflation, the November core personal consumption expenditure (PCE) index report, is scheduled for release on Friday.

As Houthi terrorists from Yemen, who are associated with Iran, attacked ships in the Red Sea, disrupting maritime traffic and forcing reroutes, oil prices continued to rise.

Later in the day, the Bank of Japan will likely keep its extremely loose monetary policy settings after concluding a two-day meeting.

Spot silver increased by 0.1% to $23.80 an ounce, while palladium decreased by 0.2% to $1,181.85 and platinum increased by 0.3% to $948.18.

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