Dollar steady, Gold at 2-month low as traders weigh Fed statements
Shafaq News/ Gold struggled near a two-month low on Thursday, as investors assessed comments from two U.S. Federal Reserve officials on unexpectedly high January inflation that has tempered hopes for swift and deeper interest rate cuts this year.
Spot gold was flat at $1,991.70 per ounce (Oz), as of 0441 GMT, after hitting its lowest since Dec. 13 on Wednesday. U.S. gold futures were flat at $2,003.40/Oz.
The U.S. dollar index (.DXY), held below a three-month peak. A stronger dollar makes gold more expensive for buyers in other currencies.
Chicago Fed President Austan Goolsbee warned against waiting too long. And stated, on Wednesday, “the central bank stated that it will meet its inflation target of two percent despite inflation being a bit higher than anticipated in the next few months. The consumer price index went up 3.1 percent on a yearly basis, which is more than the expected 2.9 percent increase.”
The comments came after an upside surprise in U.S. consumer prices, which sent bullion 1.4% lower on Tuesday in its biggest daily decline since Dec. 4.
Traders are now pricing in 97 basis points (bps) of rate cuts for this year, up from about 85 bps early on Wednesday but down from over 110 bps prior to the inflation data. The first cut will likely arrive in June now.
Among other precious metals, palladium dropped 0.5% to $929.95/Oz. It rose more than 8% on Wednesday on short-covering, regaining its premium against platinum.
Spot platinum fell 0.3% to $886.51/Oz and silver slipped 0.1% to $22.40.
Moreover, the U.S. dollar traded in a tight range on Thursday, as market players tried to gauge when the Federal Reserve will likely begin cutting interest rates as Fed officials weighed in on Tuesday's inflation data.
While under renewed pressure this week, the yen kept off the three-month low hit against the greenback on Tuesday despite data showing Japan's economy slipped into a recession as it unexpectedly shrank for two straight quarters on weak domestic demand.
The U.S. inflation data pushed back bets on a first Fed rate cut to the middle of the year, after showing the consumer price index gained 3.1% in January on a year-on-year basis, compared with an expected 2.9% rise.
The market is currently pricing in no rate cut in March compared to 77% bets a month ago that rate cuts would start then, according to CME's FedWatch tool. Markets see about a 60% chance the Fed will also hold rates at its May meeting.
Chicago Fed President Austan Goolsbee said on Wednesday the Fed's path will still be on track even if price increases run a bit hotter-than-expected in coming months, and the central bank should be wary of waiting too long before it cuts interest rates.
The dollar index, which measures the greenback against six peer currencies, consolidated below a fresh three-month high of 104.97 touched on Wednesday, ahead of U.S. retail sales in January due later on Thursday. It last sat mostly flat at 104.66.
The yen continued to hold under the three-month low of 150.88 touched on Tuesday, buoyed after Japan's top currency officials warned against "rapid" yen moves the previous day.
The currency strengthened 0.31% versus the greenback to 150.15 despite Japan's unexpectedly weak gross domestic product figures on Thursday, which saw Japan lose its title as the world's third-largest economy.
Elsewhere in the region, the Aussie dollar briefly slipped after a surprisingly weak set of jobs numbers. It was last largely unchanged at $0.64895.
The kiwi was $0.6084 per U.S. dollar.
Meanwhile, Sterling, was last trading at $1.25675, ahead of Britain's GDP data on Thursday.
The euro was flat at $1.0729.
In cryptocurrencies, bitcoin ticked up 0.45% to $52,008.20. It rose as high as $52,544.76 during the session, topping the 25-month high of $52,079 touched on Wednesday after the total value invested in bitcoin surpassed $1 trillion for the first time since November 2021.
(Reuters)
