Gold vs the dollar

Gold responds to a shifting market sentiment amid decreasing odds for a rate hike in March.

By Nadia Elbilassy | @Nadia Elbilassy | 23 January 2024

Market close
  • Dollar edges lower despite hovering close to one-month highs amid Wall Street gains, driven by robust earnings.

  • Fed expected to keep interest rates steady, shifting market expectations.

  • Gold reacts to higher treasury yields, hovering around $2025.

On the Market Watch!

Gold holds on to $2,023

On Tuesday, the greenback experienced a slight decline but maintained its proximity to the highest levels in a month. As markets reshuffled expectations of that the central bank will opt to maintain current interest rates in March, a significant departure from earlier expectations of a rate cut.

The Federal Reserve is widely anticipated to keep interest rates unchanged in its upcoming meeting next week. In anticipation of this event, investors will be focusing on crucial economic indicators from the U.S. Fourth-quarter GDP data, scheduled for release on Thursday, is expected to reveal a moderation in growth.

The preliminary estimate of the Gross Domestic Product (GDP) for the fourth quarter, is set at 2%. vs 4.9% recorded in the third quarter.

Additionally, on the calendar is the PCE price index data, set to be released on Friday, and is likely to confirm the persistence of inflationary pressures in December.

Gold's positive opening was tempered by higher treasury yields, which are currently capping its gains. The price of gold is hovering around the $2025 range, and the upward momentum is being constrained by the pressure from rising yields.

Spot Gold reversed its earlier decline, bouncing back from a low of $2,016.42 during US session. Wall Street gains also pressured the dollar driven by robust earnings reports and diminishing expectations for a rate hike in March, setting the yellow metal for a good open this morning.