Gold prices, which fluctuated following the inflation data released in the US, moved upward again on Thursday. Spot gold, which saw its lowest level since October 7 by falling to 4,073 dollars per ounce on Wednesday, was trading at 4,145 dollars as of 06:57 TSI, an increase of approximately 1 percent compared to the previous session's close.
DECLINE IN DOLLAR AND OIL SUPPORTED GOLD
The weakening of the dollar and oil prices stood out as the primary factors supporting the recovery in the markets. Gold and silver, which are priced in dollars, became more accessible to investors using other currencies as the dollar declined. The end of the five-day rise in crude oil also contributed to the easing of pressure on the markets.
GRAM GOLD AT 6,586 TL LEVEL
Domestically, gram gold was trading at 6,530 TL for buying and 6,586 TL for selling as of 07:25. In addition to the movement in ounce gold, the dollar/TL exchange rate, physical gold demand, local supply-demand balance, and general market conditions are decisive in the course of gram gold.
MARKETS FOCUSED ON US DATA
Investors' focus has now turned to the Producer Price Index (PPI) and retail sales data to be released in the US at 15:30 TSI. These data will be closely watched in terms of the direction of inflation and expectations regarding the US Federal Reserve's (Fed) interest rate policy.
The Consumer Price Index (CPI) for September in the US rose to 3.7 percent, exceeding market expectations and reaching its highest level in the last four months. It was stated that the rise in energy costs was effective in the increase in inflation.
FED INTEREST RATE HIKE EXPECTATION INCREASED
According to the CME FedWatch tool, market players are pricing in a probability of approximately 27 percent that the Fed will raise interest rates toward the end of the month. Before the US inflation data was released, this rate was at the 22 percent level.
Capital.com Senior Financial Markets Analyst Kyle Rodda stated that uncertainty regarding the Fed's interest rate policy caused volatility in prices. Rodda evaluated the level just below 4,000 dollars as a critical threshold for gold; he expressed that strong economic data could strengthen expectations that the Fed might raise interest rates faster.
INTEREST RATE MESSAGES FROM FED OFFICIALS
Although gold is seen as a hedge against inflation, a high-interest rate environment can reduce the appeal of the precious metal, which does not offer interest yields. While Chicago Fed President Austan Goolsbee described the September inflation figures as “disappointing,” San Francisco Fed President Mary Daly said that short-term interest rates might need to be raised further, but that she did not see an urgent need for a rate hike at this month's meeting.
News Source: 12punto
