Gold prices ease with cenbank rate moves in focus

Singapore, April 20 (BNA): Gold prices fell today, Thursday, after hitting their lowest level in more than two weeks in the previous session, as investors grappled with the prospect of central banks raising interest rates to contain inflationary pressures.

Spot gold was down 0.1% at $1,992.23 a troy ounce as of 03:32 GMT. US gold futures fell 0.2 percent to $2,004.00.

“Although gold broke below $1980 yesterday, investors were quick to snap a quick discount and push spot prices back above this key support level… But we are also wary of US Federal Reserve members remaining hawkish in the blackout period. On Saturday, Matt Simpson, chief market analyst at City Index, said, as reported by Reuters, ahead of the next meeting of the Federal Reserve.

New York Federal Reserve Bank President John Williams said on Wednesday that inflation remains at problematic levels and the Fed will act to bring it down.

The CME FedWatch tool shows market prices with an 83.7% chance of an increase of 25 basis points in May.

An increase in interest rates reduces the attractiveness of non-interest bearing gold because it raises the opportunity cost of the metal.

According to economists polled by Reuters, the Fed will offer a final increase of 25 basis points in May, and then will hold interest rates steady for the rest of 2023.

“A series of upbeat comments from the Federal Reserve, European Central Bank and Swiss National Bank combined with rising UK inflation has left investors second guessing their calls for a rate cut this year,” Simpson added.

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Britain’s consumer price inflation remained in double-digit territory in March, while eurozone inflation eased last month, but core readings remained stubbornly high, fueling expectations of rate hikes from the Bank of England and European Central Bank.

The dollar index was flat. A stronger dollar makes gold more expensive for buyers who hold other currencies.

Spot silver lost 0.5 percent to $25.12 an ounce, platinum fell 0.4 percent to $1,085.81, and palladium fell 0.5 percent, to $1,607.49.


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