Gold near one-week low ahead of US GDP data, ECB meeting

by Jonathan Adams
ECB

Spot gold gained 0.2% to $2,015.99 per ounce after touching a near one-week low of $2,011.06

Gold prices languished near a one-week low on Thursday as the US dollar and bond yields firmed following a strong reading of US business activity, ahead of US GDP data and the ECB policy meeting later during the day.

Spot gold gained 0.2% to $2,015.99 per ounce by 0203 GMT, after touching a near one-week low of $2,011.06 in the earlier session.

US gold futures were flat at $2,015.80.

US business activity rose in January and inflation appeared to abate, with a measure of prices charged by companies for their products dropping to the lowest level in over 3½ years, indicating that the economy began 2024 on a strong note.

The US dollar index gained 0.1%, hovering near a six-week high.

Yields on benchmark US 10-year Treasury notes edged slightly down but were not far from a more than one-month high of 4.1980% hit last week.

On Wednesday, MSCI’s global equity index rose to hit its highest level in nearly two years, backed by positive earnings and economic data in both Europe and the US as well as optimism that Chinese stimulus will support its stock markets.

Money market pricing shows traders are betting on five quarter-point rate cuts for 2024 in the US, down from six cuts two weeks back.

The first cut, initially expected in March, is now expected in May with an 86% chance, as per LSEG’s interest rate probability app IRPR.

Lower interest rates reduce the opportunity cost of holding bullion.

Investors are now awaiting the first reading of the US fourth-quarter GDP due at 1330 GMT, the European Central Bank’s policy meeting at 1515 GMT, and another inflation reading – the personal consumption expenditure (PCE) data – on Friday.

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