Gold Futures Settle Modestly Higher

Gold futures settled higher on Monday, although the dollar’s rebound from the session’s lows limited the yellow metal’s upside.

The dollar was quite sluggish as Fed rate uncertainty prevailed after New York Fed chief Williams said that a March cut seems ‘premature’, tempering market speculation about imminent rate cuts.

Also, Fed Bank of Chicago President Austan Goolsbee said on Sunday in an interview on CBS that it’s too early to declare victory over inflation fight, and interest-rate decisions would depend on incoming data.

The dollar index, which dropped to 102.38 in the Asian session, recovered to around 102.65 in the New York session before paring gains and dropping to 102.55.

Gold futures for February ended higher by $4.80 at $2,040.50 an ounce.

Silver futures for March ended down $0.047 at $24.107 an ounce, while Copper futures for March settled at $3.8520 pound, down $0.385 from the previous close.

“While the environment looks favorable for gold, recent moves suggest traders aren’t convinced at these levels and I’m not sure how much more optimistic on rates markets can reasonably become,” says Craig Erlam, Senior Market Analyst at OANDA, UK & EMEA. “A weaker dollar could help but if recent days are anything to go by, this may well become the season of pushback from central banks desperately trying to manage expectations.”

Markets are awaiting the release of U.S. inflation report for more clarity on the Federal Reserve’s rate path.

U.S. reports on personal income and spending, durable goods orders, housing starts and new and existing home sales due this week may also shed more light on the U.S. economic and rate outlook.

European Central Bank (ECB) Governing Council Joachim said Friday that the ECB has probably concluded its hiking cycle, but it’s still too early to consider lower borrowing costs.

Fellow member Madis Muller also indicated that it’s too early to talk about rate cuts in the near term.

The Bank of Japan (BOJ) began a 2-day meeting amid speculation it could change its forward guidance on interest rates or provide signals on policy change. The BOJ is widely expected to ditch negative interest rates by the end of next year.

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