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Gold Prices Inch up But Anticipate A Weekly Loss; PCE Data Are Awaited

Skylar Williams

Feb 24, 2023 13:34


Gold prices rose marginally on Friday, but were poised for a fourth consecutive week in the red due to mounting uncertainty over U.S. monetary policy, with markets awaiting a reading on the Federal Reserve's preferred inflation gauge later in the day for additional direction.

As U.S. fourth-quarter GDP data was revised slightly lower, indicating that the economy had cooled more than anticipated under the burden of high interest rates, gold experienced some respite. The data increased the likelihood that the Fed will have less capacity to continue raising interest rates.

At 19:36 E.T., spot gold climbed 0.1% to $1,823.84 per ounce, while gold futures rose 0.2% to $1,835.15 per ounce. This week, both assets were expected to lose between 0.5% and 0.8%.

The Fed's preferred inflation gauge, the Personal Consumption Expenditures price index, is anticipated to confirm that price pressures remained elevated in January. Inflation control is the central bank's top priority, and the Fed has given few hints that it will halt its rate-hiking rampage. Given that rising yields increase the opportunity cost of holding non-yielding assets such as precious metals, this is unfavorable for gold.

This week, a number of Fed speakers advocated for additional interest rate hikes, with some even advocating for a quicker pace of hikes in the future months. The minutes of the Fed's February meeting revealed that the majority of officials supported an increase in interest rates.

However, markets continue to be dubious as to where interest rates will peak. Traders' dread of a higher-than-anticipated terminal rate has limited the metals' price appreciation.

Friday was a quiet day for other precious metals, with silver and platinum futures moving less than 0.1% in either direction. However, platinum was expected to outpace its competitors this week with a nearly 3% increase, ending a six-week losing streak.

Copper prices stabilized on Friday after plunging in the previous session in response to weak U.S. GDP data that prompted concerns about a slowdown in industrial activity.

Copper futures increased 0.1% to $4.0570 per pound following a 3.3% decline in the previous session. The losses also placed copper on track for a 1.3% weekly decline.

In recent weeks, copper prices have also been impacted by uncertainty regarding China's economic recovery, the world's largest copper importer.