Investor focus on Fed keeps gold on hold in data-heavy week

12 Feb 2024 , 10:57 AM

Following a decline last week due to rising bond rates, gold prices were unchanged on Monday in holiday-shortened trade as investors anticipated comments from U.S. Federal Reserve officials during a data-heavy week.

Spot gold was barely changed at $2,022.17 per ounce, moving within a narrow $4 range.

The ounce of U.S. gold futures remained unchanged at $2,036.20.

Last week’s high U.S. Treasury yields put pressure on spot gold, which dropped 0.7% on Friday.

Because of the holidays in China, Hong Kong, Japan, South Korea, Singapore, Taiwan, Vietnam, and Malaysia, trading is anticipated to be light during Asian trading hours.

In the week ending February 6, COMEX gold speculators increased their net long position by 10,616 contracts to 82,591, according to figures released on Friday.

The largest exchange-traded fund backed by gold in the world, SPDR Gold Trust, reported a 0.2% decrease in its holdings to 841.92 tonnes on Friday from 843.66 metric tonnes on Thursday.

In addition to watching for comments from at least seven Fed officials this week, market participants will be concentrating on U.S. consumer pricing index (CPI) data on Tuesday, retail sales data on Thursday, and produce price index (PPI) data on Friday.

Before lowering rates, a number of Fed members, including Chairman Jerome Powell, stated last week that they needed more proof that inflation would continue to fall.

The opportunity cost of owning non-yielding bullion is reduced by lower interest rates.

According to LSEG’s Interest Rate Probability software, IRPR, traders have all but ruled out a cut at the Fed’s upcoming policy meeting in March. There is about a 62% chance that the Fed will reduce at its meeting in May.

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