16/02/2024: This Week in Gold with Market Updates:
Price Action:
Gold Price:
Gold opened the week trading at $2,024 an ounce after closing the previous week 0.8% lower. We saw gold move further to the downside this week on the daily trend, closing lower 3 out the 4 completed trading days. Price began to recover on Thursday, where it closed higher, breaking the 6 day losing streak it had been on. These gains continued into Friday.
On Monday, price fell 0.5% by mid-afternoon, before recovering slightly and consolidating for the remainder of the day. Price ultimately closed the day $4 lower for a 0.2% daily decline. It was an uneventful day for gold, with investors waiting in anticipation for U.S. inflation data, which was released the following day. This would offer insight into what the FED would do next regarding interest rates.
On Tuesday, gold experienced a large decline due to the latest CPI data from the U.S.After gradually rising during the early hours of trading to a weekly high of $2,028, gold fell $36 within the space of 2 hours to $1,992, a level not seen in two months. This 1.8% decline was down to unfavourable CPI data which lowered investor expectations for an early rate cut. Conversely, the DXY rose to a 3 month high, adding fuel to gold’s rapid decline. U.S. Treasury yields also rose after the stronger-than-expected CPI report.
On Wednesday, price moved sideways, consolidating within a narrow range for the majority of the day. Price ultimately closed the day fractionally lower at $1,992 an ounce.
On Thursday, gold began to make a slight recovery, rising from the low of $1,987 that was experienced on Wednesday evening. This recovery can be attributed to lower than expected retail sales in January which forced DXY and Treasury yields lower. Price closed the day 0.6% higher at $2,004 an ounce, breaking its losing streak of 6 days.
On Friday, gold’s gains eased and price was on course for its second consecutive weekly fall. The DXY and Treasury yields both moved higher, which hampered any upside potential gold had during the day. At the time of writing, gold is trading at $2,010. This is a 0.7% decline for the week.
Market Updates:
U.S. CPI:
U.S. inflation came in higher than expected in January.
CPI was seen to rise to 3.1%, higher than the forecasted 2.9%. This figure was lower than the previous month’s increase of 3.4% but remained high enough to dash investor’s hopes for an early rate cut from the FED.
Core CPI, which is generally looked at by the FED more than headline CPI, came in at 3.9%. This was higher than analyst forecasts of 3.7% and stayed on par with the previous month’s figure.
This reading completely ruled out an interest rate cut in March, which some investor’s had been hoping for, while also cutting expectations for a rate cut in May significantly.
Gold immediately reacted to this news, falling $24 (1.9%) to $2,004 within the hour. Price continued to decline, moving below the $2,000 level for the first time since mid-December.
