Thursday, February 2

Gold flat; set for biggest weekly dip in 10 after hawkish Fed


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Gold was flat on Friday and set for its sharpest weekly decline since November, as markets digested the US Federal Reserve’s policy tightening plans that propelled the dollar index to a multi-month peak.

FUNDAMENTALS

* Spot gold was unchanged at $1,796.41 per ounce by 0109 GMT. US gold futures was up 0.2% at $1,796.00.

* The metal fell about 2% for the week, it’s worst fall since Nov. 26.

* The dollar index soared to highs last seen in July 2020 against other major currencies, after the Fed said on Wednesday it could deliver faster and larger interest rate hikes in the months ahead.

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* US economic growth accelerated in the fourth quarter to post its best performance in nearly four decades in 2021, the Commerce Department reported on Thursday.

* Traders in the fed funds futures market moved to price in nearly five rate hikes this year in the wake of Powell’s remarks on Wednesday, starting with the March meeting. Futures have factored in about 30 basis points of tightening.

* Interest rate hikes raise the opportunity cost of holding non-interest paying gold.

* Gold prices will drift lower in 2022 and 2023, as central banks raise interest rates, lifting bond yields and making non-yielding bullion less attractive, a Reuters poll showed.

* Swiss gold exports rose last year to their highest since 2018, as demand for bullion in China and India, the biggest consumer markets, recovered from a collapse early in the COVID-19 pandemic, Swiss customs data showed.

* Spot silver shed 0.2% to $22.69 an ounce. Platinum was up 0.1% to $1,023.49 and palladium remained unchanged at $2,375.18.

DATA/EVENTS (GMT)

0630 France GDP Preliminary Q4

0900 Germany GDP Flash QQ SA Q4

0900 Germany GDP Flash YY NSA Q4

1000 EU Consumer Confidence Jan

1330 US Consumption, Adjusted Dec (Reporting by Asha Sistla in Bengaluru; Editing by Rashmi Aich)



financialpost.com