Gold Sits Near A Six-week Low Under Rate-hike Ambiguity

On Monday, gold prices lingered near a six-week low as traders awaited additional clues on U.S. monetary policy from a series of Federal Reserve speakers and the minutes of the central bank's February meeting.

Gold registered three consecutive weeks of losses, sliding dramatically from a nine-month peak reached earlier this year, as hot inflation readings and evidence of strength in the U.S. labor market suggested the Federal Reserve had the impetus to continue raising interest rates in the foreseeable future.

Now, the markets are uncertain as to where U.S. interest rates will peak this year, with some analysts predicting a probable peak of over 6%.

At 19:20 E.T., spot gold was unchanged at $1,837.89 per ounce, while gold futures were slightly changed at $1,846.95 per ounce (00:20 GMT). Both assets have suffered three consecutive weeks of losses.

The opportunity cost of owning non-yielding assets such as gold rises as U.S. Treasury yields climb due to rising interest rates. The yellow metal dropped in 2022 as a result of the Fed's aggressive rate hike campaign to combat inflation.

Inflation estimates for January, however, were persistent, indicating that the central bank still needed to raise interest rates further, as suggested by recent statements from Fed members. This week, other Fed speakers, including Atlanta Fed President Raphael Bostic and Cleveland Fed President Loretta Mester, are expected to provide guidance.

The Fed's February meeting minutes are also forthcoming on Wednesday. During its meeting, the central bank generally maintained its hawkish tone while raising interest rates by a relatively modest 25 basis points.

This week's focus is also on the January personal consumption expenditures price index number. The Fed's favored measure of inflation is anticipated to have remained unchanged from the previous month, indicating continuing inflationary pressure.

Monday saw a decline in other precious metals. Futures for platinum slipped 0.1% to $917.20 per ounce, while futures for silver fell 0.5% to $21.598 per ounce.

Copper futures dropped 9.4% to $4.115.50 per pound, the most among industrial metals. In contrast, the price of the precious metal rose significantly during the last week amid optimism regarding a potential recovery in the world's largest importer, China.

Copper prices were supported by supply difficulties in Panama, which threatened to cut off the country's copper supply.