Gold Price Rise as Expectations for Fed Rate Hike Slowdown and Economic Uncertainty Boost Demand

Gold contracts closed higher on Friday, January 20th, as investors responded to expectations that the US Federal Reserve (Fed) will slow down the interest rate hike.

  • Gold futures rose $4.3, or 0.22%, to close at $1,928.2 per ounce and rose 0.3% this week, marking the fifth straight weekly gain and the longest streak since August 2020.
  • Silver futures rose 6.5 cents, or 0.27%, to close at $23.935 per ounce.
  • Platinum futures rose $6.7, or 0.64%, to close at $1,047.8 per ounce.
  • Palladium futures were down $45.30, or 2.6%, at $1,723.20 per ounce.

The president of the Philadelphia Fed announced on Friday that he expects a 0.25% rate hike to be appropriate after the Fed raised interest rates aggressively in the past year. This expectation, along with investor concerns about lending risks in the US real estate sector and the release of weak economic data, contributed to the rise in gold futures.

Investors also put weight on the possibility that the Fed will only raise interest rates by 0.25% at its first monetary policy meeting this year. CME Group’s FedWatch Tool indicated that investors weigh 97.2% that the Fed will raise interest rates by 0.25% to a range of 4.50-4.75% at its January 31st to February 1st meeting.

Delaying Fed rate hikes is expected to put pressure on the dollar, which will increase the attractiveness of gold by making gold contracts cheaper for holders of other currencies. Additionally, gold is considered as an asset to hedge against inflation, even though inflation has slowed down, it was still higher than the central bank’s target.

The Spot Market is Closed

Saturday, January 21, 2023

Metals
Updated at
USD
Bid/Ask
Ounce
Change

Low/High
Gold
05.00
1,926.30
1,927.30
-5.90
-0.31%
1,920.60
1,938.60
Silver
05.00
23.91
24.01
+0.07
+0.29%
23.69
24.18
Platinum
05.00
1,041.00
1,052.00
+6.00
+0.58%
1,019.00
1,063.00
Palladium
05.00
1,650.00
1,800.00
-22.00
-1.32%
1,634.00
1,830.00
Rhodium
05.00
11,000.00
13,000.00
0.00
0.00%
11,000.00
13,000.00

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