Gold is facing headwinds from several sides at once. Prospects of higher rates are set to weigh on the yellow metal, economists at Commerzbank report.
Further Fed rate hikes
“Gold ETFs have been seeing increased outflows again of late, for one thing. Outflows in the last five days of trading have totalled 14.7 tons, which equates to just shy of three tons per day.”
“The world’s largest and most liquid Gold ETF has also registered outflows again recently. Previously, it had seen slight net inflows for several weeks, fuelling hopes that ETF investors were returning. It appears that the noticeable increase in rate hike expectations has quashed any such hopes for now.”
“According to the Fed Fund Futures, interest rates are expected to peak at around 5.35% in the summer. That’s approx. 50 bps higher than was anticipated in early February. The resulting marked rise in (real) bond yields and the simultaneous appreciation of the US Dollar are putting pressure on Gold.”
EUR/USD stabilizes near 1.0550, looks to post weekly losses
EUR/USD came under renewed bearish pressure and dropped to a fresh 2023 low below 1.0550 after the data from the US showed that PCE inflation rose at a stronger pace than expected in January. The pair remains on track to post its lowest weekly close since early December.
GBP/USD extends slide below 1.2000 on hot US PCE data
GBP/USD has extended its slide and dropped below 1.0950 in the American session on Friday. The PCE Price Index data from the US showed that annual core inflation edged higher to 4.7% in January, compared to market expectation of 4.3%, and triggered a US Dollar rally.
Gold falls to fresh 2023-low near $1,810 as US yields regain traction
Gold price remains under bearish pressure and trades at its lowest level since late December near $1,810. On the back of stronger-than-expected PCE inflation data for January, the benchmark 10-year US Treasury bond yield is up more than 1% on the day near 3.95%, weighing on XAU/USD.
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