Gold futures and spot prices ended modestly higher today. However, traders and investors are bidding the yellow metal lower, with dollar weakness responsible for all of today’s gains. As of 4:40 p.m. EST on a gold futures basis, the most active February contract is currently up $5.80, or 0.32%, and is fixed at $1875.60. At the same time, the dollar is trading down 0.68% on the day, with the dollar index currently fixed at 102.945. A simple comparison of gold’s percentage gain (+0.32%) versus the dollar’s percentage decline (-0.68%) shows that there was selling pressure in gold futures today.
The same goes for spot or physical gold. According to KGX (Kitco Gold Index), spot gold is currently fixed at $1870.80 after factoring in today’s gain of $5.10. However, on closer inspection, dollar weakness led to a gain of $12.90 an ounce and selling pressure pushed gold down $7.80, resulting in today’s modest gain.
Fundamentally and technically, selling pressure on gold can be argued. Portal News reported comment from Mary Daily, President of the San Francisco Federal Reserve Bank, who said: “The Fed should try to bring inflation down ‘as gently as possible’, but it also ‘absolutely’ needs to ensure high inflation.” will not be embedded.”
This indicated that the Fed could hike rates by 50 basis points instead of 25 basis points, which was the expected rate hike the Federal Reserve would decide at the next FOMC meeting (Jan. 31-February 1). During a webcast interview with the Wall Street Journal, she left the possibility open. “I can give you arguments for both sides.”
It confirmed the Federal Reserve’s current outlook that interest rates must eventually rise to 5.00% to 5.25% and stay there to bring inflation towards the Federal Reserve’s 2% target.
Traders and investors see the potential for a 50 basis point rise, reflected in selling pressure in both gold futures and spot prices. However, according to the CME’s FedWatch tool, there is a 79.2% chance that the Federal Reserve will hike rates by ¼% and a 20.8% chance that it will hike rates more aggressively by 50 basis points.
Market participants will be watching the December reading of the CPI (Consumer Price Index) this Thursday for more insight into the Federal Reserve’s monetary policy for 2023.
Technical studies also indicate that the price of gold could correct
Today, gold futures traded at an intraday high of $1886 before settling about $10 lower at the time of writing. Our technical studies show that gold futures could find potential resistance at $1,881, based off a late June 2022 high. Gold futures traded above this price point but closed below it, suggesting possible resistance at the high made in June.
If you want more information, just use this link.
I wish you good business as always,
Disclaimer: The views expressed in this article are those of the author and may not reflect those of the author Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article assume no responsibility for any loss and/or damage resulting from the use of this publication.