Gold prices hovered near one-week lows; watch for US data and the Central Bank decision

(1) Gold prices hovered near a one-week low on Thursday and are currently trading near $2015.16 an ounce as strong U.S. business activity data supported the dollar and U.S. Treasury yields, weighing on prices, while investors awaited U.S. gross domestic product (GDP) data and the conclusion of the European Central Bank’s policy meeting later in the day. (2) Gold prices hit a near one-week low on Wednesday after data showed that U.S. business activity picked up in January and inflation appeared to ease. (3) Kyle Rodda, an analyst at Capital.com financial markets, said, “The U.S. economy continues to resist the effects of doom and gloom, reducing market expectations for policy easing and recession risks.” ” (4) The U.S. dollar index rose 0.1%, hovering near a six-week high, making dollar-denominated gold less attractive to holders of other currencies, while the U.S. 10-year Treasury yield was not far from a more than one-month high of 4.1980% hit last week. (5) Rodda said strong data in the coming weeks and a possible pushback by the Federal Reserve at the end of its January policy meeting will leave gold vulnerable to further downside blows, given that money market conditions signal that interest rate cuts are still likely in March. (6) The market is currently pricing in a 43% chance that the Fed will cut rates in March. However, applying the IRPR based on LSEG’s Intrerest Rate probability, these expectations were largely pushed back to May, when there was an 88% chance of easing. (7) Investors are currently awaiting the preliminary US Q4 GDP at 21:30, the European Central Bank’s policy decision at 21:15, and the US personal consumption expenditures (PCE) price index on Friday