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Gold Steady After Biggest Weekly Drop Since June on Fed Liftoff

Gold Steady After Biggest Weekly Drop Since June on Fed Liftoff
© Bloomberg. Freshly cast 12,5 kilogram gold ingots in the foundry at the JSC Krastsvetmet non-ferrous metals plant in Krasnoyarsk, Russia, on Monday, July 12, 2021. Gold headed for its second decline in three sessions as strength in the dollar and equities diminished demand for the metal as an alternative asset. Photographer: Andrey Rudakov/Bloomberg

(Bloomberg) — Gold was steady in Asian trading — after its biggest weekly drop since June — as investors weighed monetary policy tightening in the U.S. against the impact of the Russia-Ukraine war.

Bullion traded around $1,919 an ounce after falling 3.4% last week as the Federal Reserve raised interest rates for the first time since 2018.

The Fed will need to raise borrowing costs higher than officials are currently projecting — to 4% to 5% — if it’s to wrestle inflation back under control, former U.S. Treasury Secretary Lawrence Summers said. Elevated interest rates typically weigh on non-interest bearing gold. Chair Jerome Powell will address the annual meeting of the National Association for Business Economics Monday.

China’s one-year loan prime rate, the de facto benchmark lending rate, will also be watched closely for signs of central bank easing after top leaders pledged measures to boost Asia’s largest economy.

Traders are also weighing mixed messages on the war in Ukraine. Turkey said Moscow and Kyiv are close to an agreement on key points, while a top Ukrainian aide said Russia had turned to “more destructive artillery.” Ukraine, meanwhile, rejected a Russian demand to surrender of the embattled southern port city of Mariupol. Gold — a haven asset — has been aided by the conflict. 

Spot gold declined 0.1% to $1,920.65 an ounce as of 8:56 a.m. in Singapore. The Bloomberg Dollar Spot Index rose 0.1%. Silver and palladium were steady, while platinum edged higher.

©2022 Bloomberg L.P.

Source: Investing.com

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