Gold flat as investors assess interest rate outlook

GOLD prices were little changed on Thursday (Feb 2), after a slew of economic data added to investor concerns that interest rates globally could stay higher for longer than expected.

Spot gold was flat at US$1,836.69 per ounce, as of 0046 GMT, after hitting a one-week peak on Wednesday. US gold futures eased 0.1 per cent to US$1,843.40.

Data on Wednesday showed US manufacturing contracted for a fourth straight month in February, but there were signs that factory activity was starting to stabilise, with a measure of new orders pulling back from a more than 2-1/2-year low.

US Federal Reserve officials were divided on Wednesday over whether recent high inflation data and a continually hot jobs market would require even more restrictive interest rates or just patience in maintaining tight monetary policy for a longer period of time.

Money markets expect the Fed’s target rate to peak at 5.465 per cent in September.

German consumer prices, harmonised to compare with other European Union countries, rose more than anticipated in February, pointing to no let-up in stubborn cost pressures and pushing up European Central Bank rate-hike expectations.

Elevated interest rates dull gold’s appeal as an inflation hedge while raising the opportunity cost of holding the non-yielding asset.

The dollar index eased 0.1 per cent, making bullion more affordable for buyers holding other currencies.

Benchmark US 10-year Treasury yields hit 4 per cent for the first time since November on Wednesday.

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Gold edges down on firmer dollar, rate-hike outlook

Spot silver was unchanged at US$20.99 per ounce, platinum lost 0.2 per cent to US$953.51 and palladium edged 0.2 per cent lower to US$1,442.96. REUTERS