As worries about future rate hikes by the Federal Reserve returned to the forefront due to U.S. inflation and labour market data that were higher than anticipated, gold prices decreased slightly on Friday, extending loss into a third straight session.
After failing to regain the levels in recent sessions. The yellow metals was now expected to conclude the week considerably below $2,000 in price.
After data revealed that personal consumption rates read much hotter than anticipated in the 1st quarters of 2023. Gold fell on Thursday while Treasury yields rose.
Separate data revealed that initial claims for unemployment benefits unexpectedly decreased over the last week, demonstrating that the labour market was robust despite the Fed’s forecasts for some cooling.
The report increased worries that the Fed’s policy would continue to tighten as long as inflation remained sticky. A situation like this is not favourable for non-yielding assets like gold.
A slowdown in the economy caused by rising interest rate and inflation was evident in the U.S. first quarter GDP figures. Which was less than anticipated. Although the Fed said it was willing to risk a brief recession to lower high inflation, given that progress was still in the black. The bank may still have capacity to raise rates.
When the central bank meets the following week. It is widely anticipat that it would increase interest rate by 25 basis points. Any signals regarding the direction of monetary policy will be keenly scrutinised.
But if the United States enters a recession and the Fed decides to stop raising interest rates. Gold demand may rise later this year. On the basis of this idea.
The yellow metals had risen nearly to record a high earlier in April and was still expect to end the month nearly 1 percent higher.
Silver and platinum futures also dipped on Friday, as other precious metals generally drifted lower.
Copper prices among industrial metals fell on Friday and were expect to suffer significant losses this week as concerns over sluggish economic growth mounted.
In addition to the disappointing the United States GDP reading. Chinese statistics revealed that industrial earnings declined more than anticipated in the 1st quarter, supporting the idea. That the world’s biggest copper importer is experiencing an uneven economic rebound.