Gold prices rise amid easing U.S. price pressures

Traders await Federal Reserve remarks amidst interest rate cut speculations
Gold prices rise amid easing U.S. price pressures
Inflation in January rose by 2.4 percent, marking the smallest annual increase since February 2021

Gold prices increased close to a monthly high on Friday, supported by indications of easing U.S. price pressures. Traders eagerly await remarks from Federal Reserve officials, with expectations of interest rate cuts later in the year shaping market sentiment.

Spot gold saw a 0.12 percent increase to $2,046.76 per ounce, as of 6:53 GMT, after hitting $2050.59 on Thursday, its highest level since February 2. Meanwhile, U.S. gold futures saw a 0.01 percent increase to $2,054.95.

In Dubai, gold prices saw around an AED1 increase. Twenty-four-carat gold was priced at AED247.75 per gram, while 22-carat stood at AED229.25 per gram.

U.S. economic data

Analysts noted the market’s relief over the absence of surprises in the Personal Consumption Expenditures (PCE) report. Gold traders reflected a positive sentiment regarding the slowdown in core PCE on an annual basis. January’s PCE inflation rose by 2.4 percent, marking the smallest annual increase since February 2021, after a 2.6 percent increase in December.

Currently, the Federal Reserve is closely monitoring overall progress on inflation, a factor that could highly influence potential interest-rate cuts later in the year. Lower interest rates tend to enhance the appeal of non-yielding assets, thus impacting its prices. Moreover, money market pricing suggests traders are currently predicting a three-quarter-point rate cut for 2024.
Investors shift their attention now to remarks from several Federal Reserve officials later today for more insights on the trajectory of interest rate cuts and their impact on gold prices.

Gold-backed ETF

The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, experienced a 3.3 percent decline in holdings in February and a 6.4 percent decrease so far this year. While negative ETF flows are constraining gold prices, China’s central bank’s significant purchases of gold reserves in the fourth quarter continue to provide support.

Read: Oil prices edge up as market awaits OPEC+ decision

Other precious metals

In addition to gold prices, spot platinum recorded a 0.8 percent increase, reaching $882.60 per ounce. Meanwhile, palladium rose by 0.7 percent to $948.38 and spot silver rose by 0.31 percent to $22.74. However, both platinum and palladium posted a second consecutive monthly decline, with palladium touching more than five-year lows of $849.13.

For more news on markets, click here.

The stories on our website are intended for informational purposes only. Those with finance, investment, tax or legal content are not to be taken as financial advice or recommendation. Refer to our full disclaimer policy here.