Gold prices fall to their lowest in almost 2 months

Gold prices fall to their lowest in almost 2 months Gold prices fell to almost two-month lows
Finance
February 24, 2023 10:21
Gold prices fall to their lowest in almost 2 months

Gold prices fell to almost two-month lows. The reduction in the number of initial claims for unemployment benefits in the US speaks in favor of a further increase in interest rates by the Federal Reserve System (Fed), Report informs referring to the auction data.

Spot gold prices fell 0.1% to $1,823.16 an ounce. Earlier on February 23, prices fell to their lowest level since December 30. COMEX gold futures traded down 0.8% at $1,826.80 an ounce.

Initial jobless claims dropped unexpectedly, according to data released on February 23. This was another indication of the persistence of limited supply in the labor market.

Meanwhile, the US GDP in the 4th quarter, according to the second estimate, grew by 2.7% per annum. The estimate has been revised down, with a 2.9% GDP growth reported last month.

While the GDP data fell short of expectations, the decline in initial jobless claims gives the Fed more room to raise interest rates further, said Bob Haberkorn, senior market strategist at RJO Futures. Fed meeting minutes released on February 22 signaled that central bankers are likely to continue raising interest rates to slow inflation, but would like to reduce the pace of rate hikes, Reuters reported.

The futures market for the federal funds rate expects the Fed to raise rates three more times, to 5.25-5.5%.

Raising interest rates increases the opportunity cost of holding gold that does not provide a guaranteed return.

The US dollar index retreated from multi-week highs, while 10-year Treasury yields fell to session lows.

Meanwhile, spot silver fell 0.9% to $21.31 an ounce, platinum traded down 0.2% at $947.33 an ounce, while palladium fell 2.9% to $1,439.82 per ounce.

UBS expects palladium prices to fall to $1,400 an ounce by the end of December as the global economy slows and platinum replaces palladium in automotive catalytic converters.

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