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Tuesday, January 31, 2023
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HomeBusinessGold price hits 4-week high with elections, inflation data in focus

Gold price hits 4-week high with elections, inflation data in focus

Gold prices rallied on Tuesday as the dollar weakened, with investors bracing for US inflation data later this week which could determine the Federal Reserve’s policy path moving forward.

Spot gold shot up 2.2% to $1,712.71 per ounce by 10:55 a.m. ET, its highest since October 6. US gold futures gained 2.1%, trading at $1,716.10 per ounce in New York.

Meanwhile, the US dollar index extended losses after hitting a more than one-week low on Monday, bolstering gold’s appeal for overseas buyers.

Bullion started Tuesday’s session slow and just below the $1,700 an ounce mark, but began to surge when the dollar failed to gather momentum for a rebound.

“The US dollar’s quest to retain lost ground is prompting a pause in gold following the latter’s surge post jobs data,” Han Tan, chief market analyst at Exinity, said in a Reuters note.

Data on Friday showed the US unemployment rate in October rose to 3.7%, raising hopes the Fed would shift to less aggressive interest rate hikes and helping gold record its best day since March 2020.

Investors will now keep a close watch on the inflation print on Thursday, and also Tuesday’s midterm elections.

Evidence of persistently elevated inflation that heralds more incoming rate hikes is likely to unwind some of gold’s recent gains, Tan said, adding that gold should catch a strong bid along with other safe havens if election results are unclear.

(With files from Reuters)

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