Gold Drops Due to Fed Worries

Due to hawkish signals from Federal Reserve officials who reaffirmed their commitment to bringing down inflation with additional rate hikes, gold fell below $1,860 an ounce on Friday and was expected to decrease for a second consecutive week.

These events followed the release of better-than-anticipated US employment figures, which may have an impact on consumer spending and the inflation rate. Investors are now looking for hints regarding the course of Fed policy tightening in additional Fed speech, US consumer confidence data due out on Friday, and US inflation data due out the following week.

As rising interest rates increase the opportunity cost of owning non-yielding bullion and vice versa, gold is particularly sensitive to the forecast for rates. Due to the likelihood of further interest rate increases by the US Federal Reserve, gold prices were little changed on Friday in the international markets and were on track to experience their second consecutive weekly loss.

Spot gold was unchanged at $1,861.11 per ounce. The metal was down 0.2 percent so far this week. American gold futures decreased by 0.3% to $1,873. Silver was trading marginally lower, down 0.98 percent, at Rs 66,374 a kilogram, while gold was trading 0.52 percent lower, at Rs 56,555 for 10 grams, on the Multi Commodity Exchange (MCX).

A steady stream of central bankers calling for future tightening has kept COMEX gold prices near a one-month low of $1,870 per troy ounce, and they are on track for a little weekly decrease. As investors processed the most recent data, particularly the healthy labor market, market expectations for US interest rates to peak in July grew slightly.

Sell gold today as prices rise by about Rs 57,100

Fed funds are currently expected to peak at 5.15 percent in July, up from the 4.9 percent observed prior to the US Labour report, according to interest rate futures. The 10-year yield increased to 3.66 percent as US Treasury yields reversed early losses and surged throughout the curve. The non-yielding yellow metal has lost part of its luster as a result of the recent increase in yields. The US CPI numbers, which are due next week, may now come into focus in order to predict the Fed’s future course of action.

On February 9, gold prices were falling, with Comex Gold fluctuating between $1,889.93 and $1,862.21 and MCX Gold fluctuating between Rs 57,419 and Rs 56,835. Following its lows of 102.51, the Dollar Index gradually increased. On February 9, the Department of Labor released data on unemployment claims that revealed more Americans than anticipated had filed new claims for unemployment benefits the previous week. According to figures from the State Administration of Foreign Exchange, China’s gold reserves increased to 65.12 million ounces at the end of January, an increase of 480,000 ounces from the end of December 2022.

Traders will be watching today’s Consumer Sentiment data and, more significantly, the inflation data released the following week. Gold’s immediate MCX resistance is at Rs 57,200, and its immediate support is close to Rs 56,300. On the Comex, the nearest areas of $1875, and $1835, respectively, represent imminent resistance and support.

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