Gold struggles for traction as traders await US Fed cues

GOLD prices struggled for momentum in early Asian trading on Tuesday (Feb 18), as traders awaited a US Federal Reserve meeting due next week for clues about its monetary tightening path.

Spot gold was little changed at US$1,955.24 per ounce by 0110 GMT. US gold futures gained 0.1 per cent to US$1,958.80.

The US dollar was steady at 99.88, hovering close to its April 2022 lows of 99.58.

Interest rate futures showed markets were pricing in another rate hike at the Fed’s Jul 25-26 meeting, with rate cuts seen well into 2024.

Fed chair Jerome Powell had earlier highlighted the majority view that two additional rate increases would be needed.

Fed governor Christopher Waller made the case for tighter policy in the central bank leadership’s final remarks before the blackout on public comments ahead of the July meeting.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion.

Speaking to Bloomberg TV on Monday, Treasury Secretary Janet Yellen said she did not expect the US economy to enter into a recession.

Goldman Sachs’ chief economist, Jan Hatzius, said the bank was cutting its probability that a US recession will start in the next 12 months to 20 per cent from an earlier 25 per cent forecast.

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China’s economy grew at a frail pace in the second quarter, raising pressure on policymakers to deliver more stimulus to shore up activity.

Spot silver fell 0.1 per cent to US$24.83 per ounce, platinum was little changed at US$976.07 while palladium rose 0.1 per cent to US$1,284.91. REUTERS