Gold prices rangebound as Fed reiterates higher-for-longer rates
Investing.com-- Gold prices rose slightly in Asian trade on Thursday, but remained largely within a recent trading range as a slew of signals from the Federal Reserve reiterated the prospect of higher-for-longer U.S. interest rates.
Bullion prices saw some relief this week as the dollar fell sharply from three-month highs. But further losses in the greenback now appeared limited, as Treasury yields remained close to recent peaks.
Gold moved largely within a $2,000 to $2,050 an ounce trading range established over the past month. While further gains in the yellow metal were stymied by the prospect of higher rates, its downside was also limited by increased concerns over worsening economic conditions across the globe, especially as Japan and the UK entered a recession.
Spot gold rose 0.2% to $2,029.78 an ounce, while gold futures expiring in April rose 0.3% to $2,039.55 an ounce by 00:13 ET (05:13 GMT).
The minutes of the Fed’s late-January meeting, released on Wednesday, showed that the bank was in no hurry to begin cutting interest rates early. This notion was echoed by a slew of Fed officials this week, who cited concerns over sticky inflation and persistent strength in the U.S. economy.
The comments saw traders largely wipe out expectations for rate cuts in March and May, while also ramping up expectations that the central bank will keep rates steady in June.
The CME Fedwatch tool showed traders pricing in a 53.6% chance for a 25 basis point cut in June, and a 28.7% chance for rates to remain steady. The latter rose from a 19.7% chance seen last week.
The prospect of higher-for-longer rates bodes poorly for gold, given that it increases the opportunity cost of investing in the yellow metal.
Still, Goldman Sachs
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