Gold rises as investors eye U.S. economic data

The price of gold saw a slight increase in an unpredictable market session on February 8th, 2023, as investors eagerly await further economic data to make sense of the U.S. Federal Reserve’s rate hike plan. At 3:19 p.m. ET, spot gold was up 0.1% at $1,875.10 per ounce, while U.S. gold futures rose 0.3% to settle at $1,890.70.

The recent shift in sentiment was mainly due to the U.S. jobs report, and the market was on the edge of its seat waiting to hear what Federal Reserve Chair Jerome Powell would say. However, he failed to provide any indication of a change in the rate hike strategy. David Meger, director of metals trading at High Ridge Futures, said that gold prices are expected to remain stable and dips in the market are viewed as buying opportunities in the short term.

Powell stated that interest rates may need to be higher than expected if the U.S. economy continues to remain strong, but also noted that a process of disinflation is underway. New York Fed President John Williams echoed this sentiment, saying that his expectations for future central bank rate cuts are due to the likelihood of lower levels of inflation in the future.

Gold prices are highly sensitive to rising U.S. interest rates, as it increases the cost of holding non-yielding bullion. As market participants await January inflation numbers next week, it could offer more insight into the Fed’s rate hike path. Rupert Rowling, an analyst at Kinesis Money, said that the support for gold prices could be due to the buying from central banks, including China, India, and Turkey.

The dollar edged up, making gold less attractive to holders of other currencies, limiting its gains. Spot silver rose 0.3% to $22.25, while platinum slipped 0.1% to $972.00, and palladium dipped 0.1% to $1,643.37.