May 09, 2024 (MENAFN via COMTEX) --
(MENAFN) On Wednesday, gold prices experienced a decline, attributed in part to the strengthening of the US dollar, while traders engaged in assessing the potential timeline for the reduction of US interest rates and awaited further clarity on monetary policy. In spot transactions, gold saw a decrease of 0.3 percent, reaching USD2,307.87 per ounce by 0757 GMT, while US gold futures also experienced a similar decline, losing 0.3 percent to USD2,317.20 an ounce.
The ascent of the dollar index by 0.2 percent on the same day played a role in this scenario, making gold relatively more expensive for holders of other currencies, thus influencing market dynamics. Attention is now directed towards forthcoming data on consumer sentiment from the University of Michigan, scheduled for release on Friday, as well as statements from various Federal Reserve officials, offering potential insights into the future trajectory of US central bank policy. Additionally, the release of US Consumer Price Index (CPI) data slated for May 15 is eagerly anticipated for further indications on inflation trends.
According to Ilya Spivak, head of global macro at Tasty Live, the prevailing narrative revolves around the Federal Reserve's dual considerations of inflation concerns and its stance on interest rates. Spivak suggests that despite worries about inflation, the Federal Reserve is inclined towards maintaining its current interest rate stance, with a predisposition towards further cuts if conditions permit. This sentiment underscores a prevailing cautious approach. However, Spivak notes that significant shifts may not occur until the release of CPI data next week.
Looking ahead, Spivak speculates on potential scenarios based on forthcoming data outcomes. Should the data reveal concerning inflationary trends, it may limit the Federal Reserve's capacity to execute interest rate cuts, consequently exerting downward pressure on gold prices. This is due to the inverse relationship between gold and interest rates; higher interest rates tend to diminish the appeal of gold as an investment, as it does not yield returns in the same manner as interest-bearing assets. Thus, the evolving narrative surrounding monetary policy and inflation dynamics continues to shape market sentiments and influence gold pricing trends.â??
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COMTEX_452102681/2604/2024-05-09T01:55:13
