Gold at highs due to slow Fed rate hike
2023.01.05 08:53
Gold at highs due to slow Fed rate hike
Budrigannews.com – After the minutes of the Federal Reserve’s December meeting showed that policymakers unanimously supported raising interest rates at a slower pace, gold prices rose to a near-seven-month high on Thursday, providing some relief to metal markets that had been battered by rising borrowing costs.
More bets that the dollar had peaked after a stellar run in 2022 and is likely to weaken further in the coming months were fueled by the Fed’s possibility of smaller interest rate hikes. fell significantly to a three-week low following the minutes.
However, the also demonstrated that policymakers in the United States are planning to keep interest rates higher for a longer period of time because they are so intent on lowering inflation. Gains in metal markets will probably be constrained in such a scenario.
by 19:26 ET (00:26 GMT), they had reached their highest level since mid-June, rising slightly to $1,855.45 an ounce and remaining steady around $1,860.80 an ounce. Both instruments are up nearly 2% over the past two sessions after a strong start to 2023.
After the International Monetary Fund issued a warning that the world’s largest economies may experience a recession in 2023, increased demand for safe haven assets for assets other than the boosted the price of gold.
However, the possibility of a global economic slowdown caused broader metal markets to fall. After a poor start to the year, copper prices among industrial metals began to fall and were on track for a third day in a row of losses.
fell to $3.7412 a pound in early Asian trade, a decrease of 0.1 percent from their previous close in 2022.
As China, the world’s largest copper importer, faces an overwhelming rise in COVID-19 infections, the red metal was heavily impacted by uncertainty regarding an economic reopening there.
Copper prices are set for more near-term volatility as the timeline for said reopening remains unclear, despite the fact that demand is anticipated to eventually recover as the Chinese economy reopens.
Industrial metals were also impacted by signs that business activity was slowing in other major economies. Wednesday’s data showed that shrank for a second straight month in December, raising concerns about the country’s economic slowdown.
After the reading from the United States, prices for industrial-use precious metals like and also fell by 6%.
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