Gold regains some of its shine with lower dollar

16 Feb 2023

Riyadh - Maaal

Gold prices regained some momentum today, Thursday, with the decline of the dollar, but the possibility that the Federal Reserve (the US Central Bank) would raise interest rates again kept investors nervous.

By 0333 GMT, spot gold rose 0.3 percent to $1,840.94 an ounce, after hitting its lowest level since early January on Wednesday. US gold futures rose 0.3 percent to $1,850.20.

According to Reuters, high interest rates discourage investment in gold, which does not yield a return, although it is considered a hedge against rising prices.

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Harish said. Head of Commodities Research at Geojit Financial Services “Despite the recent positive economic data for the United States and the continued pressure of the strength of the US dollar on gold’s safe-haven status, there are opportunities for a simple new technical recovery, as prices fell to their lowest levels in several weeks.” ..

Data on Wednesday showed US retail sales rebounded in January after declining for two consecutive months, indicating the continued resilience of the economy despite higher borrowing costs.

Strong retail sales figures, along with data released on Tuesday showing continued high inflation in the United States last month, reinforced fears that the Federal Reserve (the US central bank) will keep interest rates high for a longer period.

Harish said that the data may give the US Central Bank confidence to raise interest rates more, which puts pressure on gold in the short term.

A number of Federal Reserve policymakers indicated this week that more increases are needed to bring inflation down to the central bank’s target of 2 percent.

The dollar index fell 0.3 percent, after reaching a six-week high on Wednesday, making gold priced in the US currency less expensive for buyers abroad.

The benchmark 10-year Treasury yields recorded the highest level since January 3

As for other precious metals, spot silver rose 0.7 percent to $21.77 an ounce. Platinum rose 0.6 percent to $920.16, and palladium rose 1 percent to $1,479.16.