Shaky Early Year Gold Rally Ahead Of Fed Cues And Economic Data Release

Shaky Early Year Gold Rally Ahead Of Fed Cues And Economic Data Release

Gold's new year rally in prices appears to have run out of steam, and the yellow metal dipped below an eight-month high on Wednesday before a slew of Federal Reserve officials and US economic data due for release later this week.

Although expectations of a less hawkish Fed and a potential recession have driven gold's strong gains over the past two weeks, traders are now waiting for more signals to confirm this trend. Speeches from several Fed officials will be released this week, most importantly Vice Chair Lael Brainard on Thursday.

A series of US economic data releases are also here to shed more light on how the world's largest economy has performed throughout December, starting with inflation data on the producer price index, retail sales and industrial production which will be released on Wednesday.

Spot gold prices were flat at $1908.74/oz, while gold futures were up 0.1% at $1911.30/oz as of 0719 WIB. Both instruments fell 0.5% on Tuesday.

The dollar's weakness, coupled with growing fears of a recession this year, saw gold shoot up to a more than eight-month high last week. The yellow metal is now trading around $160 below record highs, amid growing expectations that the Fed will raise interest rates at a slower pace this year.

The dollar regained ground against a basket of currencies this week, recovering from a more than seven-month low. But the greenback's gains were limited as markets also await the Bank of Japan's policy meeting.

Any hawkish signals from central banks could shake the dollar and provide more support for gold, especially as the BOJ's tightening of ultra-loose monetary policy sets more headwinds to the global economy.

Other precious metals also continued to be in tight ranges on Wednesday.

Among industrial metals, copper prices edged down after a sharp rally on Tuesday amid signs of economic resilience in China, the world's biggest copper importer.

Copper was down 0.2% at $4.2272, after rallying more than 2% in the previous session.

While data on Tuesday showed China's economic growth slowed substantially in 2022 from a year earlier, growth improved-than-expected in the fourth quarter, especially in December, raising hopes that the country will finally see a recovery this year after a major easing of anti-government restrictions. COVID.

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