Global gold prices steady amid expectations for further US rate hikes
Gold prices held firm on Monday, below a three-and a half-month peak hit last week, amid expectations of further US interest rate hikes to come this year.
Spot gold was mostly unchanged at $1,322.50 an ounce at 8.29am. Last week, the metal touched its highest since 15 September at $1,325.86. Spot gold rose for a fourth straight week last week. US gold futures were also mostly unchanged on Monday at $1,321.50 an ounce.
“January is usually a good month for gold prices and should remain so on the anticipation of physical demand ahead of the Chinese New Year,” said Stephen Innes, APAC head of trading at Oanda. “While there could be some downside pressure from a possible US dollar correction, gold will likely remain firm until a March Fed hike possibility comes on the radar,” Innes said.
The US December non-farm payrolls report on Friday was weaker than expected, but investors reckoned the US Federal Reserve would still raise interest rates multiple times this year, although at a gradual pace.
The dollar held steady above a recent three-and a half-month low against a basket of currency peers on Monday. Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Meanwhile, hedge funds and money managers raised their net long positions in COMEX gold in the week to 2 January, US Commodity Futures Trading Commission (CFTC) data showed on Friday. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.14% to 834.86 tonnes on Friday from 836.04 tonnes on Thursday.
Physical gold demand across Asia remained subdued last week as prices rallied to a three-and-a-half-month high, keeping retail buyers away from the market.
Among other precious metals, spot silver inched 0.1% lower to $17.20 an ounce, after having hit a one-and a half-month high on Friday at $17.29. Platinum was down 0.2% at $967.90 an ounce, hitting a more than three-and a half-month top at $970.5 earlier in the session. Palladium was stable at $1,090.49 an ounce. Last week paladiaum hit a record high at $1,105.70. Reuters