Gold Prices Steady as Dollar Rally Pauses
Gold prices steadied on Tuesday after tumbling sharply over the past week as a rally in the dollar paused for breath, with markets now watching for the yellow metal to potentially test a key support level.
Concerns over U.S. Interest Rates
The near-term outlook for gold remained marred by persistent concerns over higher-for-longer U.S. interest rates, especially as markets began pricing the possibility that the Federal Reserve will keep rates static until June.
Factors Affecting Gold Prices
Strong U.S. economic data and hawkish comments from Fed Chair Jerome Powell were the key drivers of this notion, with both factors triggering sharp declines in gold prices over the past two sessions.
Gold Prices and U.S. Treasury Yields
The dollar rallied to a near three-month high, while U.S. Treasury yields also appreciated sharply in the face of higher-for-longer rates, which further pressured gold.
Gold Prices at $2,000 Support Level
Gold steadied at $2,026.33 an ounce, while expiring in April were flat at $2,042.40 an ounce by 00:23 ET (05:23 GMT).
Market Outlook for Gold Prices
Several analysts said that spot gold prices were likely to test the $2,000 an ounce level in the coming days, especially if there was little change in the outlook for U.S. interest rates.
Market Sentiment and Gold Prices
The market showed traders pricing in an 83% chance the Fed will keep rates steady in March, and were steadily dialing up bets for a similar move in May.
Impact of U.S. Interest Rates on Gold Prices
Higher-for-longer U.S. rates diminish gold’s appeal by increasing the opportunity cost of investing in the yellow metal.
Copper Prices Rise Amid China Woes
Among industrial metals, copper prices rose on Tuesday after logging four straight sessions of losses, as markets digested more weak economic signals from China.
Weak Purchasing Managers Index Readings from China
Prices were hit chiefly by a string of weak purchasing managers index readings from China, which is the world’s largest copper importer.
Focus on Economic Data from China
Focus this week is now on for January, due on Thursday. The reading also comes a day before the week-long Lunar New Year holiday.
