Gold bulls to pin hopes on upcoming US CPI inflation data
gold closed with a loss of 0.48% at $2025 Friday as the US yields chugged higher to close 0.47% up at 4.177%. Spot gold was down nearly 0.70% on the week. The ten-year US yields firmed up by around 3.70% on the weekly basis, whereas the two-year yields were up roughly 2% on the week as the yields settled at 4.48% Friday. The US Dollar Index, which is up nearly 3% from its cyclical low, was up by 0.12% on the week to close at 104.08. The Index was unable to capitalise fully on surging US yields as risk appetite remained healthy.
Although the last week was light on data, a major theme has emerged, which is likely to influence gold prices in short term. Resilient US economy and hawkish stance of the Federal Reserve officials are slowly driving this point home that most of the US Federal Reserve officials are in no hurry to cut rates anytime soon. They would like to see inflationary pressure subside further in a broadening manner before they gain enough confidence to cut rates later this year. It means that a March rate cut is virtually off the table, which is in line with the the post FOMC statements of the Fed Chair Powell.
Richmond Fed President Barkin, a voting member of FOMC this year, said that regional lenders’ problems in commercial real estate (CRE) won’t be enough to get the Fed to cut rates early as CRE is a known issue at this point and he expects the banking system has enough capital to weather the risk. His views echo those of the Fed Chair Powell's views expressed in his February 4 interview with CBS's
