18 January 2023 | Other

Gold is getting cheaper as the dollar is getting stronger

On Wednesday, the U.S. dollar strengthened and gold prices fell a bit. The Federal Reserve System is expected to slow the pace of interest rate hikes. That's holding back a deeper decline.

Edward Meir, a metals analyst at Marex, said that gold will jump to the $1900 level in the near future. In his opinion, there won't be any big moves and the gold price will remain in a narrow range. He thinks lower inflation and interest rates could have a positive effect on gold.

Last year there were four rate hikes by 75 basis points. Then, in December, the U.S. central bank slowed down, increasing rates by 50 basis points. Traders expect the hike to be 25 basis points at the Fed's next meeting. On Tuesday, Tom Barkin, president of the Federal Reserve Bank of Richmond, said that the Fed's rate hike and stopping point will depend on inflation trends.

U.S. retail sales and the Producer Price Index (PPI) are expected to be released today. Investors are keeping an eye on this.

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