Tuesday, December 12, 2023

Gold set for worst week in over a month on higher dollar and yields

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Gold prices were flat on Friday and on track for their worst week in more than a month, weighed down by a stronger U.S. dollar and Treasury yields after hawkish remarks from Federal Reserve Chair Jerome Powell.FUNDAMENTALS

* Spot gold was little changed at $1,959.74 per ounce by 0127 GMT after hitting its lowest since Oct. 18 on Thursday. U.S. gold futures fell 0.3% to $1,964.50.* Gold was also set for second straight week of losses, down 1.6% so far this week.

* U.S. Fed officials “are not confident” that interest rates are yet high enough to finish the battle with inflation, and may be nearing the end of how much help they can expect in lowering price pressures, Powell said on Thursday.

* Following Powell comments, benchmark 10-year US Treasury yields rose from more than one-month lows, making non-yielding bullion less attractive for investors.

* Meanwhile, the dollar index was heading for its best week in two months against its rivals, making gold more expensive for other currency holders.

* Traders pushed out bets on the Fed’s likely first interest-rate cut to June of next year from May earlier.

* Higher rates raise the opportunity cost of holding gold.

* Data showed the number of Americans filing new claims for unemployment benefits edged down last week, signalling that layoffs remain low even as the still-strong job market shows some signs of cooling.

* In the Middle East, Gaza officials said Israel launched air strikes on or near at least three hospitals on Friday.

* Spot silver rose 0.3% to $22.68 per ounce, while platinum was flat at $859.66. Palladium gained 0.8% to $999.71 per ounce, but was holding near its lowest level since 2018. DATA/EVENTS (GMT) 0700 UK GDP Est 3M/3M Sept 0700 UK GDP Estimate MM, YY Sept 0700 UK Manufacturing Output MM Sept 0700 UK GDP Prelim QQ, YY Q3 1500 US U Mich Sentiment Prelim Nov.

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