Gold posted gains on Thursday, a day after settling at its lowest price in three weeks, but US dollar strength in the wake of a rate hike and a statement from the European Central Bank helped limit the metal’s rise .
Investors also looked to some new US inflation data for hints at the US Federal Reserve’s interest rate decision ahead of the central bank’s meeting next week.
Price promotion
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Gold futures for December delivery GCZ23,
-0.12%
rose 30 cents, or less than 0.1%, to close at $1,932.80 an ounce on Comex. The most active contract on Wednesday marked its lowest performance since August 22, according to Dow Jones Market Data. -
Silver futures for December SIZ23,
-1.32%
fell 19 cents, or 0.8%, to $22.99 an ounce. -
Platinum for October delivery PLV23,
+0.44%
rose $5.90, or almost 0.7%, to $911.10 an ounce, while palladium for December delivery PLV23,
+0.44%
fell $6, or 0.5%, to $1,254.80 an ounce. -
Buyer for December delivery HGZ23,
+0.57%
rose 3 cents, or almost 0.8%, to $3.82 a pound.
Market factors
Traders described the ECB’s 25 basis point rate hike on Thursday as “softening”, potentially increasing gold’s appeal by suggesting global bond yields may not need to rise much higher.
“The ECB today raised rates by 25 basis points, bringing the deposit rate to 4.00%, which can only be characterized as a mild rate hike,” said a team of macro analysts at TD Securities. “This is a clear sign that if there are no further notable upside surprises for inflation and its drivers, they are done raising rates.”
The US dollar got a boost from the ECB interest rate hike, while the euro EURUSD,
fell. The ICE US Dollar Index DXY rose 0.6% to 105.43 on Thursday, putting pressure on dollar-denominated gold prices.
Also read: This is what the gold-silver price ratio tells us about silver
“It is difficult to be too optimistic about gold at this point, as the renewed rise in inflation could force the Fed to perhaps raise rates again before the end of the year,” said Fawad Razaqzada, market analyst at City Index and FOREX.com. , according to a market update.
U.S. retail sales and wholesale producer prices for August were released Thursday morning. US retail sales rose 0.6% in August, while the producer price index, a gauge of wholesale price growth, rose 0.7%.
This data followed a consumer price reading on Wednesday that showed a 0.6% rise in August – the biggest rise in 14 months.
Gold prices overall remained on a “downward trajectory” as traders continue to evaluate the possible outcomes of the upcoming Fed meeting,” said Denys Peleshok, head of Asia at CPT Markets.
“Higher-than-expected US inflation rates have led to increased uncertainty about the direction of monetary policy,” he said in a market note. While the Fed is expected to leave its policy rate unchanged at next week’s meeting, “heightened inflation pressures may raise some concerns about another rate hike this year.”
The potential for the central bank to keep interest rates “high for longer” could continue to weigh on gold prices, which have fallen since their peak in May this year,” Peleshok said.