Among the news that fueled its decline was that the US economy maintained a strong pace of growth in the fourth quarter as consumers boosted spending on goods, but the momentum appears to have slowed considerably towards the end of the year. “The overall takeaway from this data is that the economy and labor market remain resilient (…) overall it leaves room for the Fed to hike for longer,” said Tai Wong, a senior trader at Heraeus Precious Metals in New York.
In this context, the dollar index gained 0.4%, staying close to the session’s highs and causing gold becomes less attractive to holders of other currencies. Also, Treasury yields also approached their session highs, weighing on gold.
Money markets expect a 25 basis point rate hike at the Federal Reserve’s two-day policy committee meeting next week, with a terminal rate of 4.9% in June, still below below the 5% rate endorsed by many policy makers. According to independent analyst Ross Norman, consumer personal spending figures, due to be released on Friday before next week’s meetings, will sway both bulls and bears.
In what context should you buy gold? If the Fed stops raising interest rates, this is usually beneficial for gold, as they reduce the opportunity cost of holding this asset without yield.
Meanwhile, silver was up 0.1% at $23.92 an ounce, platinum was down 2.4% at $1,014.86 and palladium was down 1.2% at $1,677.79.
Source: Ambito
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