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Gold price backpedals as new US economic data gives boost to dollar

Gold prices backpedaled on Thursday after new data showed the US economy rebounded faster than previously estimated, boosting the dollar, and potentially setting the Federal Reserve on a path to keep raising interest rates.

Spot gold was down 1.0% to $1,796.48 per ounce by 11:15 a.m. ET, erasing most of its gains from earlier in the week. US gold futures were down 1.2% to $1,804.20 per ounce in New York.

[Click here for an interactive chart of gold prices]

Meanwhile, the US dollar index edged up 0.3%, making precious metals slightly more expensive for holders of other currencies.

The latest data showed that new claims for unemployment benefits increased less than expected last week in the US, while the economy rebounded faster in the third quarter, rising 3.2% against the previously estimated 2.9%.

“The economic numbers we’re seeing indicate that there’s most likely going to be a more prolonged increase in interest rates,” Jeffrey Sica, chief executive officer of Circle Squared Alternative Investments, said in a Reuters report.

With the Fed raising rates and gold potentially seeing inflows in early-2023 from equities on the back of safe-haven trades, “it’s like driving with the brakes on – gold prices are going to move up, but not as much being that the Fed is committed to the 2% inflation target,” Sica said.

Gold prices are on track for a second consecutive yearly decline, with prices down more than $250 since March highs as central bankers hiked interest rates to tame inflation.

However, the latest price movements offer little insight on the outlook for gold heading into 2023.

Independent analyst Ross Norman highlighted the issue of book-squaring ahead of year-end or early new positions being put in ahead of the new year rush.

“It would be dangerous to read too much into gold’s price action just now given so many market participants are absent for the festive break… and thin markets are often prone to exaggerated moves on small volumes.”

(With files from Reuters)

Source: MINING.COM – Read More

 


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