Gold prices edged higher on Monday, as market players looked ahead to a busy week of economic data, including monthly inflation indicators, for further clues on how fast the Federal Reserve will raise interest rates this year
Gold Edges Higher at Start of Busy Week – Gold prices edged higher on Monday, as market players looked ahead to a busy week of economic data, including monthly inflation indicators, for further clues on how fast the Federal Reserve will raise interest rates this year. Gold futures declined on Friday to suffer from their largest weekly loss in two months, as the dollar index and Treasury yields gained, dulling investment demand for the precious metal. Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. A stronger U.S. dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies. Besides the inflation report, this week’s calendar also features U.S. data on retail sales, producer prices, building permits, housing starts, industrial production, weekly jobless claims, consumer sentiment, as well as surveys on manufacturing conditions in the Philadelphia and New York regions. The Fed held interest rates unchanged last month and raised its inflation outlook, signaling that borrowing costs will continue to climb under new central bank chief Jerome Powell. Traders are currently putting the chances of a 25-basis-point hike by the Fed at its March meeting at around 76%, according to Investing.com’s Fed Rate Monitor Tool.
Oil Prices Bounce Back After Turbulent Week – Crude prices started the week in positive territory on Monday, as market players returned to the market to seek cheap bargains in wake of last week’s steep declines. Oil prices finished lower for a sixth straight session on Friday to tally their worst weekly loss in two years. WTI crude lost roughly 9.6% last week, which was the biggest such decline since January 2016, while Brent gave up about 8.5%, as investors continued to fret over soaring U.S. output levels. The number of oil drilling rigs jumped by 26 to 791 last week, General Electric(NYSE:GE)’s Baker Hughes energy services firm said in its closely followed report on Friday. That marked a third straight week of increases and the largest weekly rise in more than a year, implying that further gains in domestic production are ahead. That came after data on Wednesday showed U.S. oil production, driven by shale extraction, rose to an all-time high of 10.25 million barrels per day (bpd). That figure is above that of top exporter Saudi Arabia and within reach of Russia’s output levels.
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