Gold will continue to trend downward as the dollar and Treasury yields increase

Due to unfavourable global indicators, the gold rate is trading lower on Thursday, while the silver rate is down 0.23%. Gold April futures were down Rs 76 or 0.14% on the Multi Commodities Exchange, trading at Rs 54,835 per 10 kilos. At Rs 61,672 per kg on the MCX, silver May futures were trading 145 rupees lower. In anticipation of U.S. jobs statistics that would have an impact on the Federal Reserve’s monetary policy course, several investors kept their money on the sidelines on Thursday as the price of yellow metal fluctuated widely around the world. After touching its lowest price since February 28 on Wednesday, spot gold barely changed at $1,813.39 per ounce, moving in a $5 range. United States gold futures declined 0.1% to $1,816.70.

“COMEX Gold futures further depreciated on Wednesday and maintained near the lowest levels since the year’s beginning, on expectations of higher rates in the U.S. Fed Chair Jerome Powell stated in testimony in Washington this week that the central bank was “prepared to increase the pace of rate hikes” should data on employment, job openings, consumer prices, and producer prices come in strongly. The remarks increased the value of the dollar, and U.S. two-year government yields are now above 5% and at 15-year highs, which has decreased demand for the non-yielding yellow metal.

Markets now anticipate a 50 basis point rate increase from the Fed at the March FOMC meeting, depending on how tomorrow’s Labour statistics and the CPI results turn out. According to US ADP employment data, private firms in the U.S. unexpectedly added 242K positions in February 2023, far more than the 200K market prediction and the upwardly revised 119K in January, raising hopes for tomorrow’s NFP. We anticipate that the downward trend in gold prices will continue, according to Ravindra Rao, CMT, EPAT, VP-Head Commodities Research at Kotak Securities.

Following U.S. Federal Reserve Chair Jerome Powell’s hawkish statements, which helped an uptick in the Dollar index and US Yields, gold traded steadily after falling sharply in earlier sessions. On Wednesday, Fed Chair Powell reiterated his call for faster and larger interest rate increases, but he also stressed that the debate was still in progress and that the outcome would depend on the information that would be released prior to the policy meeting of the US central bank in two weeks. Fed Governor Powell issued a warning, predicting that recent indicators of inflation and the labour market resiliency would likely cause interest rates to rise above what the market had anticipated.

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