Markets 2 MIN READ

Gold gains as traders hunker down for economic cues

April 25, 2023By Reuters

April 25 (Reuters) – Gold prices rose on Tuesday as steeply lower Treasury yields countered pressure from a stronger dollar, while investors awaited a slew of US economic data due later this week that could sway the Federal Reserve’s interest rate-hike stance.

Spot gold was up 0.7% to USD 2,002.32 per ounce by 2:17 p.m. EDT (1817 GMT), while US gold futures settled 0.3% higher at USD 2,004.50.

The rival safe-haven dollar rose 0.5%, making bullion more expensive for buyers holding other currencies, while benchmark 10-year Treasury yields fell by their largest amount since March.

A weak US consumer confidence report and lacklustre manufacturing data fanned fears of economic slowdown, lowering the bets for a rate hike next week.

Markets now see a 73% chance of a 25-basis-point rate hike at the Fed’s May 2-3 meeting.

Next on the radar is the quarterly gross domestic product data scheduled for Thursday followed by the reading on the core personal consumption expenditures (PCE) index, the Fed’s favored inflation gauge, on Friday.

“The Fed would do its best to try and hold rates higher in order to quell inflation but that likely means that it might be a constraint on the economy growing as quickly,” said Everett Millman, chief market analyst at Gainesville Coins.

“No matter what decision they have to make, it’s probably going to result in some type of stress, and that looming uncertainty is certainly what gold is going to be sensitive to.”

While gold is considered a safe haven during economic uncertainties, higher interest rates dull appeal for zero-yield bullion.

Traders also took stock of US Treasury Secretary Janet Yellen’s warning that failure by Congress to raise the government’s debt ceiling would trigger an “economic catastrophe” that would send interest rates higher for years to come.

Silver shed 0.5% to USD 25.04 per ounce, platinum rose 0.8% to USD 1,090.73 and palladium lost 3.1% to USD 1,487.66.

(Reporting by Deep Vakil and Ashitha Shivaprasad in Bengaluru; Editing by Subhranshu Sahu, Shailesh Kuber and Maju Samuel)


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