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Wednesday, March 29, 2023

Gold hits its highest level in eight months after good US inflation data

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“Should the Federal Reserve fail to counter market expectations that US rate ceilings are near and that an eventual rate cut is still on the table, that could tempt gold bulls to focus their sights at the $2,000 level,” said Han Tanchief market analyst at Exinity in dialogue with Reuters.

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gold prices rose as much as 1.3% on Thursday to cross the threshold of 1,900 dollars per ounce per first time since early May 2021after the data showed that the US consumer prices fell for the first time in more than two years and a half in December.

Bullion was also supported by the comments from the authorities of the Fed that the central bank may slow its rate hikes as inflation slowed further in December. However, they warned that the rates would likely continue to rise for longer.

Nail lower interest rates are often beneficial for bullionsince they reduce the opportunity cost of holding an asset that does not earn interest.

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The dollar was lower, further helping bullion as a weaker greenback makes the metal cheaper for buyers with other currencies.

Among other precious metals, the silver cash it was down 0.1% at $23.76 the ounce, while the platinum rose 0.1%, at $1,068.42. Both metals were heading for a weekly drop. The palladium was down 0.6% to $1,781.00.

What is expected of gold by 2023

According to analysts consulted by Ambit, Much of the 2023 outlook for world markets will depend on the path of monetary policy, and on central banks beginning to ease interest rate hikes begun last year.

However, they stress that the rate cuts for 2023 will depend to a large extent on the pace of inflation, since if it does not continue to converge to the target levels, it will be difficult to imagine a year of less aggressive monetary policies. Therefore, In order to see a positive impact on gold prices, we will need, as a sine qua non, a shift to a more dovish monetary policy by central banks.

For economists, whether gold becomes a good option depends on monetary policy being dovish and causing the dollar to weaken.

Source: Ambito

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