Gold prices posted modest gains on Thursday, with the market consolidating after a volatile day on Wednesday which ultimately saw gold end in the red.
Prices edged as high as $2,025 an ounce on Thursday, partly recouping Wednesday’s sharp losses which saw the yellow metal fall as low as $2,012 an ounce.
The slight gains came after monthly US Durable Goods Orders showed little change in December, against expectations of a 1.1% increase, raising a question mark over the health of the US economy. Serving as a counterweight, the US GDP growth rate increased to 3.3% in Q4, far ahead of market expectations of 2%.
Separately, the ECB held interest rates unchanged at 4.5% as widely expected Thursday, as the bank continues to try to bring inflation back down to 2%.
However, looking at the longer-term charts, the most recent month has seen gold prices lose ground overall, as the market has come under pressure from declining expectations of an imminent cut in interest rates by the US Fed within the first quarter.
Most recent figures have pointed to a stronger-than-expected US economy and this has led to expectations that the central bank could maintain a higher-for-longer stance on interest rates, weighing on non-yield-bearing assets like gold.
For the time being, this factor has overruled any bullish impact from the current heightened geopolitical tensions stemming from Russia’s invasion of Ukraine and war between the Israeli state and Hamas in Gaza, which has since widened to include exchanges of fire between western powers and Iran-backed Houthis in Yemen.
Looking ahead, Friday will see the release of US Personal Income and Personal Spending figures for December, while Tuesday next week will see quarterly and year-on-year Euro Area GDP growth rates.
Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.
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