Investing.com – Gold prices rose for a third consecutive session on Thursday, as US inflation data raised bets that it may rise again only before pausing.
Yesterday’s data missed expectations, as inflation rose less than experts expected, adding more support to the precious metal.
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Gold and the dollar now
It rose 0.65% to $2,038.
It rose by 0.45%, at $2,024 an ounce.
While it fell by 0.03%, to score 101.1 points.
gold when settling yesterday
Gold prices settled higher on Wednesday, after investors assessed US inflation data, which showed a smaller-than-expected rise in prices.
Upon settlement, June delivery rose 0.3%, or $5.9, to $2,024.9 an ounce.
Spot contracts rose 0.58% to 2014 dollars an ounce.
see analysts
Gold prices rose more than 1% on Wednesday after data showed the US Consumer Price Index rose 0.1% last month, compared to expectations for a 0.2% increase, after rising 0.4% in February.
“Expectations that the Fed’s hike cycle may be nearing its end is supported by recent US consumer price index data, while lower Treasury yields and a weaker dollar support gold prices,” said Yip John Rong, market analyst at IG.
He added, “Recession fears allow gold prices to rely on their status as a safe haven…while technical conditions reveal some moderation in the upward momentum on the recent gains.”
Wang Tao, a technical analyst, told Reuters that gold may retest resistance at $2032.
The Fed’s interest tracker on Investing Saudi Arabia shows that markets are pricing in a 68.7% chance of a 25 basis point increase in May, with rates cut in the second half of the year.
Recent Fed statements
San Francisco Fed President Mary Daly said on Wednesday that while the Fed had “more work to do” on raising interest rates, tighter credit conditions may invite a pause.
“The strength of the economy and high inflation require more work to be done on raising interest rates,” she added.
“There are good reasons that the economy may continue to slow even without more rate hikes,” Daly said. Reaffirming commitment to the inflation target of 2%.
Richmond Fed President Thomas Barkin said the Fed has more work to do in bringing inflation down to its 2% target because the latest data on price pressures has not been soft enough.
Fed minutes yesterday
Minutes of the Fed’s March meeting showed that many policymakers were considering pausing interest rate increases after expectations that banking sector pressures would push the economy into recession.
The Fed’s discussion focused on the banking crisis and its repercussions on the economy and the banking sector. Although Deputy Chief Supervisor Michael Barr said the banking sector was “healthy and resilient”, economists said the economy would be hit, expecting the US economy to experience a mild recession later in 2023, with the economy rebounding in the next two years.
Fed members expect GDP growth of just 0.4% for 2023. With the Atlanta Fed tracking first-quarter gains of around 2.2%, that points to a slowdown later in the year.
This crisis has caused some speculation that the Fed may remain conservative on interest rates, but officials stressed that more needed to be done to tame inflation.
Many policymakers wondered whether to keep interest rates steady while they watched to see how the crisis unfolded. However, they relented and agreed to vote for another rate hike “due to high inflation, the strength of recent economic data, and their commitment to bring inflation down to the committee’s long-term target of 2%.”
In fact, the minutes indicated that some members were inclined to raise the interest rate by half a point before the banking problems. Officials said inflation was “extremely high” though they stressed that the data received and the impact of increases should be factored into future policy formulation.
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