9 January (Reuters) Gold prices increased to an eight-month high on Monday as investors bet on a less aggressive rate-hike trajectory from the U.S. Federal Reserve this year and a lower currency made greenback-priced gold cheaper for international purchasers.
As of 0557 GMT, spot gold was up 0.7% at $1,878.06 per ounce, its highest price since May 9, 2022. Additionally, U.S. gold futures increased 0.7% to $1,881.90.
The dollar index decreased by 0.3%.
“On Friday, softer U.S. data increased gold’s appeal. Data implies that the Fed can afford to decrease the pace of tightening because the economy is beginning to feel the consequences of the Fed’s cumulative tightening in 2022 “said Christopher Wong, a strategist with OCBC FX.
A roughly 2% increase in gold prices was caused by statistics released on Friday showing a deceleration in U.S. wage growth and a decline in services industry activity in December.
For additional hints on the speed of rate hikes, traders will now turn to Fed Chair Jerome Powell’s address at a central bank conference in Stockholm on Tuesday and U.S. consumer price index data due this week.
“The CPI numbers from this week would be crucial. While the currency remains under pressure, a further slowdown in price pressures could increase interest in gold. However, a sudden increase in the CPI could make people nervous “Wong.
The appeal of storing gold as an inflation hedge is diminished by higher interest rates, which also increase the opportunity cost of doing so.
Focused on as well as China’s decision to reopen its borders after a long period of closure.
As big manufacturers restart production, industrial demand may grow exponentially, according to Clifford Bennett, the chief economist at ACY Securities.
Palladium rose 1% to $1,822.62 and spot silver increased 1% to $24.04, while platinum decreased 0.2% to $1,088.38.