Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Gold prices muted as Fed week kicks off

Published 01/29/2023, 07:46 PM
Updated 01/29/2023, 07:51 PM

By Ambar Warrick

Investing.com -- Gold prices kept to a tight range on Monday as traders hunkered down in anticipation of a Federal Reserve meeting this week, with focus also remaining on any signs of slowing economic growth across the globe.

The Fed is widely expected to raise interest rates by a relatively smaller 25 basis points on Wednesday. But the central bank’s stance on future rate hikes will be closely watched, given that recent data has painted a somewhat mixed picture of the U.S. economy.

While inflation eased as expected in recent months, it still remained well above the Fed’s 2% annual target. The U.S. job market and economic growth also cooled less than expected in late-2022, which gives the Fed more economic headroom to keep hiking rates.

Any hawkish signals from the central bank are likely to be negative for non-yielding assets such as gold. Markets are also awaiting a reading on January nonfarm payrolls later this week.

Spot gold rose 0.1% to $1,929.95 an ounce, while gold futures steadied around $1,928.64 an ounce by 19:20 ET (00:20 GMT).

Focus this week is also on fourth-quarter economic growth data and inflation readings from the euro zone, due on Tuesday and Wednesday, respectively. Any signs of a pronounced slowdown in the region, particularly economic heavyweight Germany, could push up safe haven demand for gold.

The yellow metal benefited from growing fears of a global recession this year, as traders also exited the dollar in anticipation of slower interest rate hikes by the Federal Reserve.

But gold’s rally stalled at nine-month highs after data showed the U.S. economy grew more than expected in the fourth quarter, indicating that the country still remained resilient despite high inflation and rising interest rates.

This also boosted the dollar, although the greenback still languished near nine-month lows on Monday.

Among industrial metals, copper prices rose slightly in anticipation of Chinese markets resuming trade after a week-long holiday.

High-grade copper futures rose 0.1% to $4.2390 a pound, after breaking a five-week winning streak last week.

A slew of Chinese economic data is also awaited this week for more cues on the world’s largest copper importer, after it recently relaxed most anti-COVID measures. A reopening in the Chinese economy is expected to boost global copper demand, which in turn could benefit prices of the red metal.

Expectations of tighter copper supplies also benefited prices, after miner MMG Ltd (HK:1208) flagged potential production disruptions in its Peru mines due to civil unrest in the country.

Latest comments

Wow, Reuters putting gold news on the Corona virus page. Covid's severity is over thanks to natural mutation process of viruses. Can't even find meaningful news to print any longer.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.