A stronger U.S. dollar pushed gold prices down, with hopes for an early interest rate cut from the U.S. Federal Reserve all but extinguished.
According to Reuters, spot gold edged lower by 0.13 percent to $2,031.58 per ounce, as of 1:42 p.m. ET (1842 GMT). Meanwhile, U.S. gold futures settled at $2,047.9 per ounce, down 0.2 percent.
Yellow metal rising
Experts believe a stronger evidence of the global economy slowing down will propel gold prices to recover.
Analysts are now shifting their focus toward the United States Consumer Price Index (CPI) data for January. This will be released on Tuesday next week. The data will provide analysts a better idea of when the Federal Reserve (Fed) could start reducing interest rates.
Most believe that the sooner interest rates fall, the better it will be for gold prices. Interest rate cuts will lower the opportunity cost of holding a non-yielding asset.
Read: Gold prices hold steady with market focus on this week’s Fed statements
However, the countdown to the Chinese New Year has begun and will certainly have an impact on gold prices. This early, commodity traders have turned their focus on the world’s largest gold consumer for hints on where prices might be headed.
According to data tracked by GSC Commodity Intelligence, most Chinese investors, households and banks have been piling up gold. This is because China’s stock market and real-estate sectors are going through a crisis.
The Chinese gold buying spree is putting a pressure on supply, and as a consequence making gold more expensive.
New era for gold
Together with blistering demand from central banks, China’s gold-buying binge helped push the price of gold to all-time highs in December. This has resulted in prices settling firmly above $2,000 an ounce this year – ultimately setting a new floor for the market.
The GSC Commodity Intelligence has even sent out a notice to clients saying “we are now entering a ‘new era’ for gold.
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