Gold prices remain steady as investors reassess market risks

LONDON (April 17) Gold prices in Asia steadied on Monday after hawkish comments from Federal Reserve officials triggered profit-taking in the prior session. The yellow metal had fallen nearly 2% on Friday following remarks by noted Fed hawk, Governor Christopher Waller, who called for more monetary tightening.

Waller’s comments overshadowed recent speculation that the Fed was close to hitting its terminal rate and that a pause in its current rate hike cycle was imminent. The softer-than-expected inflation data and signs of a slowing labor market in recent weeks had fueled gains in gold, making the metal a safe haven for investors.

Gold futures fell slightly to $2,002.49 an ounce, while spot gold steadied at $2,015.25 an ounce, still trading about $40 away from record highs reached last week.

The yellow metal has been largely supported by safe-haven demand over the past month, which was also fueled in part by the collapse of several U.S. banks. Although fears of a bigger crisis appear to have eased, expectations of a U.S. recession this year have continued to drive inflows into gold.

The U.S. dollar slightly recovered from recent losses following Waller’s comments, trading flat against a basket of currencies on Monday. This recent weakness in the greenback has also aided commodities priced in the dollar.

According to analysts at Citi, while a new record high remains a key hurdle for gold, prices are likely to “grind higher.” The bank also raised its 2023 average gold price forecast by 7.9% to $2,050 an ounce.

Gold and other non-yielding assets had been affected by rising U.S. interest rates through 2022. However, they made a strong recovery this year as bulls looked to the end of future rate hikes. Fed Fund futures prices suggest that markets are positioning for one more hike in May, followed by a pause in June.

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