COMEX Gold inched up for the fourth consecutive session hitting a high near $1871/oz. Gold ended Wednesday’s session with a gain of 0.70% at $1859/oz. The recent breakout in gold above $1825/oz has given bulls an edge who are now targeting $1884/oz which is the June 2022 high.
The major factor that has pushed gold higher is the retreat in the US dollar from the highs amid the Fed’s stance of slowing the pace of Interest rate hikes. The minutes for the Dec FOMC meeting revealed Fed’s concerns about inflation and that the interest rates might remain higher for a long time although the pace might drop. This has brought down the 10-year US bond yields to 3.70%.
The US Dollar index also dropped after a sharp rise seen a day before when rose as high as 105. Although the momentum in gold is positive it will continue to cue from the US economic data prints and the dollar.
Crude
NYMEX WTI Crude oil fell for the second straight session of the New year as demand concerns weighed. Crude fell more than 5.30% as it ended the session near $73/bbl. In today’s early session crude is trading around a percent higher. The COVID-19 situation in China and its impact on demand from the world’s largest importer of oil is continuing to haunt the markets.
Additionally, IMF’s warning of a potential global recession in 2023, slowing manufacturing activity and a Reuters survey showing OPEC oil output rose in December have put downward pressure on oil prices.
The focus will now turn to the EIA oil inventory report due today after the API report showed a build in crude inventories by 3.298 million barrels as against a drop of 1.3 million the previous week.