Hawkish Fed forward guidance pressure gold lower
Gold continues to trade under pressure moving to lower prices after yesterday’s CPI report for January indicated that inflation declined to 6.4% year-over-year. January’s CPI report came in lower by 6.4% year-over-year, than the prior month of December. However, analysts were expecting a larger decline with expectations that yesterday’s report would come in between 6.2% and 6.3%.
Gold futures basis the most active April 2023 contract is currently down $18.80 or 1.01% and fixed at $1846.60. Dollar strength was responsible for a little over half of today’s decline with the dollar gaining 63 points and the dollar index is currently fixed at 103.76. Gold intrinsically benefits from higher levels of inflation and higher interest rates are detrimental. This is because gold does not generate a yield which makes US treasuries and other interest-bearing assets more favorable.
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