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Friday, December 9, 2022

Gold prices rise as the dollar falls; attention is focused on the Fed meeting and US inflation data

Gold firms as dollar eases; spotlight on Fed meeting, US inflation data

 

Delhi, India: Gold costs ticked up on Friday helped by a milder dollar, while financial backers prepared for key US expansion information and Central bank's rate climb choice due the following week.


As of 0241 GMT, spot gold was up 0.2 percent at $1,793.16 per ounce, but it has fallen 0.3 percent so far this week. To $1,804.88, US gold futures gained 0.2%.


The dollar index lost 0.1 percent. Buyers holding other currencies find gold to be more appealing when the dollar is weaker. According to Clifford Bennett, chief economist at ACY Securities, as we approach the Fed meeting and CPI data next week, there is a real chance that gold will rise.


At the Federal Reserve's policy meeting on December 13-14, market participants anticipate a 93% chance of a 50-basis point rate increase. The U.S. Consumer Price Index (CPI) report for November, which is due on December 13, will also be of interest to investors.


Bennett added, "then dollar might weaken and all of a sudden you could see a perfect storm rushing over gold's horizon" if the Fed slows the pace as expected and reports a relatively moderate CPI.


Because they lower the opportunity cost of holding the non-yielding asset, lower interest rates typically benefit bullion.


OANDA senior analyst Edward Moya wrote in a note, "Traders will care to see what the Fed has to say about the trend of inflation and where rates could peak."


"Until we have further indications, gold looks like it will find a home around the $1,800 level."


In spite of growing concerns about a recession, the number of Americans filing new claims for unemployment benefits increased moderately last week, indicating a still-tight and robust labor market.


Platinum gained 0.4 percent to $1,006.91, while spot silver gained 0.6 percent to $23.20. Despite a 0.4% decline to $1,918.50, Palladium was on track for its second weekly gain.


India's Delhi: Gold prices increased on Friday, helped along by a weaker dollar, as financial backers prepared for important US expansion data and the Central Bank's rate hike decision next week.


Spot gold was up 0.2% at $1,793.16 per ounce at 0241 GMT, but it has fallen 0.3% so far this week. US gold futures gained 0.2 percent to $1,804.88.


The dollar index went down 0.1%. When the dollar is weaker, buyers who hold other currencies find gold to be more appealing. Clifford Bennett, chief economist at ACY Securities, claims that gold will likely rise in the weeks leading up to the Fed meeting and CPI data.


Market participants anticipate a 93% probability of a 50-basis point rate increase at the Federal Reserve's policy meeting on December 13 and 14. Investors will also be interested in the U.S. Consumer Price Index (CPI) report for November, which is due on December 13.


If the Fed slows the pace as anticipated and reports a relatively moderate CPI, Bennett added, "then dollar might weaken and all of a sudden you could see a perfect storm rushing over gold's horizon."


Lower interest rates usually help bullion because they lower the opportunity cost of holding the non-yielding asset.


"Traders will care to see what the Fed has to say about the trend of inflation and where rates could peak," OANDA senior analyst Edward Moya wrote in a note.


"Gold looks like it will find a home around the $1,800 level until we have further indications,"


Notwithstanding developing worries about a downturn, the quantity of Americans documenting new cases for joblessness benefits expanded reasonably last week, showing a still-close and vigorous work market.


Spot silver gained 0.6% to $23.20, while platinum gained 0.4% to $1,006.91. Palladium was on track for its second weekly gain, despite a 0.4% decline to $1,918.50.

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