Spot Gold Price to US$1,826.40, Speculation of The Fed’s Interest Rate Hike Covers the Market

Spot Gold Price to US$1,826.40, Speculation of The Fed's Interest Rate Hike Covers the Market

global.gerbangindonesia.org – Spot Gold Price to US$1,826.40, Speculation of The Fed’s Interest Rate Hike Covers the Market

Gold prices were flat on Friday (11/2), slipping from a two-week high in the previous session. Bets on a Federal Reserve rate hike after a sharp spike in consumer prices blanketed the market.

According to Reuters, spot gold was little changed at US$1,826.40 per troy ounce by 0916 GMT, but poised for a weekly gain of around 1%. Meanwhile, US gold futures fell 0.5% to US$1,827.70.

“Stronger-than-expected inflation increases the risk of a faster rate hike,” said Soni Kumari, commodities analyst at ANZ.

Increasing pressure on the Fed to take a stronger stance on inflation after an unexpectedly large spike in US consumer prices supports the view that the central bank is behind the curve.

Expectations for a strong Fed response next month lifted the dollar and triggered a slump in global stock markets and pushed the 10-year US Treasury yields higher on Thursday, but they have since taken a step back.

Higher yields and rising interest rates reduce gold’s appeal by increasing the opportunity cost of holding non-interest-paying gold. Meanwhile a higher dollar makes it less attractive to overseas buyers.

“From a technical point of view, gold is still trying to cross the $1,835 threshold, while the first major support zone is represented by the $1,800 figure,” said Carlo Alberto De Casa, market analyst at Kinesis.

“Investors still trust gold,” he said in a note, and that “gold also represents a hedge if central banks are unable to contain inflation.”

Elsewhere, spot silver fell 0.7% to $23.02 per troy ounce, but remained poised for a weekly gain of around 2.4%. Platinum rose 0.1% to $1026.98, palladium fell 0.5% to $2,242.98 and was set for a second weekly loss.

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