Gold struggles for momentum as investors await further Fed cues

Reuters · 07 Dec 2022 10.2K Views

GOLD prices struggled for momentum in early Asian trade on Wednesday (Dec 7) as investors looked to next week’s US Federal Reserve policy meeting for clues on the pace of rate hikes.

Spot gold was little changed at US$1,770.46 per ounce, as of 0008 GMT.

US gold futures were flat at US$1,783.10.

Fed fund futures are now pricing in a 91 per cent chance of 50-basis point (bps) rate increase in the December meeting.

The Fed meeting is scheduled on Dec 13-14.

High interest rates have weighed on gold’s traditional status as a hedge against inflation and other uncertainties this year, as they translate into higher opportunity cost of holding the non-yielding metal.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.3 per cent to 906.06 tonnes on Tuesday.

The US trade deficit widened sharply in October as slowing global demand and a strong dollar pushed goods exports to a seven-month low, suggesting that trade could be a drag on economic growth this quarter if the trend persists.

Meanwhile, the European Central Bank will have to raise interest rates several more times to tame price pressures, even if headline inflation is now close to its peak, ECB chief economist Philip Lane told the Milano Finanza on Tuesday.

Spot silver inched 0.1 per cent lower to US$22.13, platinum was flat at US$988.42 and palladium was unchanged at US$1,848.48. 


Editor: Callie
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