Gold gives up nine-month peak ahead of US growth data

Gold prices fell in European trade off nine-month highs hit recently in the Asian session on profit-taking while investors shun new positions ahead of important US growth data. 

Such data offer important clues on the pace of policy tightening by the Fed in the months to come, with markets now fully pricing in a 0.25% rate hike in February. 

Gold Prices

Gold prices fell 0.5% to $1,936 an ounce, after hitting April 2022 highs at $1,949, and after rising 0.5% yesterday, the third profit in a row as dollar weakened against a basket of major rivals. 

The Dollar

The dollar index rose over 0.1% today away from recent eight-month lows at 101.50, against a basket of major rivals. 

Fed Rates

Pricing for a 0.25% rate hike by the Federal Reserve in February stands at 100%, slowing it down from recent 0.5% rate hikes.

Growth Data

Markets are awaiting US GDP growth data before taking positions, with weak data forcing the Fed to slow down its pace of policy tightening and boosting gold prices, and vice versa.

US GDP growth is expected at 2.6% in the fourth quarter, slowing down from 3.2% in the third quarter of 2022. 

Analysts believe that for gold to reliably pierce the $2,000 levels, dollar has to continue its decline.

The SPDR

Gold holdings at the SPDR Gold Trust rose 2.03 tones yesterday to a total of 919.37 tones, the highest since October 31.