Gold Extends Pullback from 1-Month High
Gold fell to the $2,660 per ounce mark, extending the pullback from the one-month high of $2,685 touched on January 10th, aligned with similar movements from US Treasuries amid growing concerns that interest rates will remain high this year.
Reports indicated that US President-elect Donald Trump’s team is considering declaring economic emergency to gradually set tariffs on US trading partners. This magnified the impact of other pro-inflationary economic policies campaigned by the upcoming administration, including higher deficit spending, thus strengthening the case for a hawkish Fed.
In the meantime, rising costs for energy services in Europe also dented the case for lower rates by the ECB. Higher borrowing costs lift the opportunity cost of holding non-interest bearing bullion assets, pressuring demand for gold. In turn, a softer than expected increase in US consumer prices raised hopes of a softer CPI print on Wednesday, limiting the pressure for bullion.
Source: Trading Economics
