© Reuters. Gold records big losses after the US inflation data
Arabictrader.com – Gold prices recorded very strong declines during trading today, Wednesday, to reach their lowest level since last January, and recorded a decline of 3.19%, affected by several factors, most notably; The issuance of US inflation data for January, which reinforced investor concerns about the upcoming US Federal Reserve decisions regarding the pace of raising interest rates that it will decide to continue to curb inflation, in addition to the US rise, in light of the markets’ anticipation for the release of US retail sales data today.
Gold prices now:
Spot contracts witnessed a strong decline of 1.07%, to record about $1,834.50 an ounce, as well as a decline to $1,854.80 an ounce, recording a decline of 1.05%.
Factors affecting the decline in gold prices:
The US Consumer Price Index data for January, released yesterday, caused gold prices to collapse on the back of today’s trading; As the data issued by the US Census Bureau revealed that US inflation decreased to a level of 6.4%, exceeding market expectations, which indicated a decline to the level of 6.2% only, which reinforced concerns about the upcoming US Federal Reserve decisions about its monetary policy to curb high inflation, and this in turn pushed gold prices to continue the momentum. bearish.
Also, gold prices witnessed a significant decline due to the rise in the US dollar index – which measures the performance of the US currency against a basket of 6 other major foreign currencies – affected by US inflation data, in addition to statements by some members of the US Federal Reserve regarding the levels of raising interest rates during the upcoming meetings, as it recorded The dollar index increased by 0.30% and reached approximately 103,420 points, and was negatively reflected on gold prices, due to the inverse relationship between the two parties.
In this context, a member of the US Federal Reserve, Logan, called for the need to maintain high interest rates for a long time and higher than expected, adding that very little tightening of monetary policy is the greatest risk, and she continued that the US Federal Reserve needs to raise interest gradually in order to notice clear evidence of a decline in inflation for the bank’s goal. 2% in a sustainable manner, which in turn reinforced the drop in gold prices in today’s trading.
At the same time, John Williams, the policy maker at the US Federal Reserve, called for the need to continue monetary tightening and to raise interest rates higher than expected, taking into account the upward risks of inflation, in addition to the possibility that the Fed will reach the final interest rate to between 5.00-5.50. percent, which caused the price of gold to drop.
In addition, the markets are still awaiting the issuance of US retail sales data, which will be issued later in the day, which will in turn affect the performance of the US dollar positively if it comes out better than expected, which will reflect negatively on gold prices, in light of the inverse relationship between the dollar and gold.
On the other hand, gold prices found some support due to the decline in 10-year returns, despite the rise in the US dollar index, as the 10-year US bond yields recorded a decline of 0.62% and reached approximately 3,738 points, which in turn reduced gold’s losses.
Other precious metals prices:
Spot contracts recorded a decline of 1.57% to reach $21.51 an ounce, and the price of platinum also declined by 1.67%, to record $1,473.39 an ounce, and spot prices decreased by 0.56% to $929.88 an ounce.
