On Wednesday, gold increased for a third session as the dollar declined, but concerns about future interest rate increases from the United States due to persistently rising global inflation held prices in check.
As of 0536 GMT, spot gold was up 0.2% at $1,831.43 per ounce. A 0.1% increase brought U.S. gold futures to $1,838.90.
According to Matt Simpson, a senior market analyst at City Index, “Gold is oversold over the near-term, having found support at its 200-day exponential moving average and the U.S. dollar is due a pullback against February’s gains.”
The area between $1,850 and $1,860 may be the gold’s next destination, at which point we’ll be on the lookout for another peak.
After a series of U.S. data showed a robust economy and a tight labor market, the yellow metal experienced its worst month since June 2021 in February, fueling concerns that the U.S. Federal Reserve would continue raising interest rates to fight inflation.
High interest rates reduce gold’s appeal as an inflation hedge while rising the opportunity cost of holding the non-yielding commodity.
Money markets anticipate that the U.S. central bank’s target rate, which is currently fluctuating between 4.50% and 4.75%, will top at 5.413% by July. Rate reduction possibilities this year have mostly been priced out.
According to a study released on Tuesday, lower-middle-income households were the main beneficiaries of an unexpected decline in consumer confidence in the United States in February.
For buyers holding other currencies, bullion is now more affordable as the dollar index went down by 0.1%.
Platinum increased by 0.4% to $955.89, palladium increased by 2% to $1,445.03, and spot silver increased by 0.8% to $21.09 per ounce.