Gold’s new year rally fizzles ahead of Fed cues, U.S. data deluge
By Ambar Warrick
Investing.com -- A new year rally in gold prices appeared to have run out of steam, with the yellow metal hovering below an eight-month high on Wednesday as markets hunkered down before a slew of Federal Reserve speakers and U.S. economic data due this week.
While expectations of a less hawkish Fed and a potential recession spurred strong gains in gold over the past two weeks, traders are now awaiting more signals to confirm this trend. Addresses from several Fed officials are due this week, the most notable being Vice Chair Lael Brainard on Thursday.
A barrage of U.S. economic readings is also set to shed more light on how the world’s largest economy performed through December, starting with producer price index inflation , retail sales , and industrial production data due later on Wednesday.
Spot gold was flat at $1,908.74 an ounce, while gold futures rose 0.1% to $1,911.30 an ounce by 19:19 ET (00:19 GMT). Both instruments fell 0.5% on Tuesday.
Weakness in the dollar, coupled with growing fears of a recession this year saw gold rally sharply to an over eight-month high last week. The yellow metal is now trading about $160 below a record high, amid growing bets that the Fed will hike rates at a slower pace this year .
The dollar regained some strength against a basket of currencies this week, recovering from an over seven-month low. But gains in the greenback were limited as markets also awaited a Bank of Japan policy meeting later in the day.
Any hawkish signals from the central bank could rattle the dollar and provide more support for gold, especially as the tightening of the BOJ’s ultra-loose monetary policy spells more global economic headwinds.
Other precious metals also kept to tight ranges on Wednesday.
Among industrial metals, copper prices edged lower after rallying sharply on Tuesday amid signs of economic resilience in China, the world’s largest copper importer.
High-grade copper futures fell 0.2% to $4.2272 a pound, after rallying over 2% in the prior session.
While data on Tuesday showed that China’s economic growth slowed substantially in 2022 from the prior year, better-than-expected growth in the fourth quarter , particularly in December, drummed up hopes that the country will see an eventual recovery this year after the relaxing of most anti-COVID restrictions.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.
Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb
Drop an image here or