The market expects the US Commerce Department to release its preliminary fourth-quarter Gross Domestic Product (GDP) estimates on Thursday, which could set the tone for the Federal Reserve’s January 31 policy meeting. to February 1.
The day, which started lower, “was due to a technical correction, since investors closed positions in order to take profits before the publication of the data”said Ricardo Evangelista, a senior analyst at ActivTrades.
“The general feeling is positive, since the Fed is expected to take a more dovish stance and announce a 25 basis point rate hike when it meets next week. If confirmed, the scenario will be negative for the US dollar and Treasuries, offering support for gold,” he added.
Lower interest rates tend to be beneficial to bullion by lowering the opportunity cost of holding the non-interest bearing asset.
Traders expect the Federal Reserve to further slow its pace of rate hikes, having halted its tightening to 50 basis points last month after four consecutive 75 basis point hikes. Fears over a possible recession also provided support for gold, according to analysts.
US business activity contracted for the seventh consecutive month in January, although the decline eased in both the manufacturing and services sectors for the first time since September.
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Source: Ambito
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