Gold Gains After Soft Economic Data As The US Dollar Falls

(CTN News) – The price of gold increased on Thursday as softer economic data in the United States pushed the dollar and the yield on Treasury bonds lower, while the focus of the market shifted to commentary from Federal Reserve officials regarding the timing of interest rate reductions.

In the spot gold market, gold was up 0.6% at $2,004.22 per ounce. A 0.6% increase in U.S. gold futures was recorded at $2,016.20 on Tuesday.

In response to a surprisingly soft retail sales number, gold bulls surged back above $2000, according to Tai Wong, an independent metal analyst based in New York City.

There was a greater decline in retail sales in January than anticipated in the United States. A separate report from the Labor Department indicated that initial claims for state unemployment benefits declined by 8,000 to 212,000 on a seasonally adjusted basis.

As a result of the data, the dollar index extended losses and the benchmark 10-year Treasury yield went down, making non-yielding bullion more attractive to overseas investors.

According to Chris Gaffney, president of global markets at EverBank, gold’s main driver in the short term is interest rate expectations – there is a risk that it will remain under pressure until the Fed announces that it is time to lower interest rates.

The U.S. consumer price index soared unexpectedly on Tuesday, causing bullion to decline by 1.4%.

It is likely that the Federal Reserve will wait until June before cutting interest rates, traders bet after the inflation data was released. When interest rates are higher, bullion has a higher opportunity cost.

The Vice Chair of the Federal Reserve for Supervision, Michael Barr, stated on Wednesday that the road to 2% inflation may be bumpy. Moreover, Chicago Fed President Austan Goolsbee warned against delaying rate cuts for an excessive period of time.

It is now time to focus on the producer price index numbers due on Friday. During the remainder of this week, three more Fed officials are scheduled to speak.

As of September 30, palladium was trading at $953.69 per ounce, up 2.1%. During the day on Wednesday, palladium surged over 8% following the short-covering, regaining its premium over platinum.

The spot price of platinum has increased by 0.9% to $897.11, while the spot price of silver has risen by 2.3% to $22.92.

SEE ALSO:

Despite Gaza Crisis, Biden Gives Palestinians Temporary Refuge