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Gold is Pressured by Rate Hike Speculation

by Didimax Team

The Gold commodity reversed course and came under pressure again. It was as the dollar strengthened after the release of weaker United States economic data failed to raise expectations of another interest rate hike by the Federal Reserve.

That is especially for next week amid the inflationary pressures. Based on the data it could be seen that gold fell by 0.3% to $1,983.19 an ounce, while US gold futures fell by 0.2% to $1,9a92.1

Data showed that that the American gross domestic product grew slower than expected in the latest quarter. However, it seems that markets focused on above-forecast inflation figures.

Gold is known as a safe haven during economic uncertainty. However, the high inflation could make the Fed's monetary tightening is longer. That may dimming the appeal for zero-yielding bullion as well. 


25 BP Raise is the Possibility 

Markets see an 88% chance of the US Federal reserve to raise their interest rates by 25 basis points on May 2-3. Market participants are now awaiting for the core Personal Consumption Expenditures (PCE) index data.

It is especially for the March due on Friday data. This precious metal has received support from concerns about the United States banking sector.

This comes with the U.S. government officials so far unwilling to intervene in First Republic Bank's rescue process. Although higher interest rates work against gold because they don't deliver any yield, they could benefit this commodity. 

That is as it increases the likelihood of another banking crisis. That opinion and possibility was stated by an independent analyst, Ross Norman in an occasion.

Meanwhile, Oil Price is Steady

Elsewhere, the oil prices steadied as signs of tightening supply in America helped balance fresh concerns over a slowdown in the economy of that country. It was not predicted by many traders before. 

For your information, America is the world's biggest crude consumer so far. Based on a release, the US crude futures traded by 0.2% higher at $74.45 a barrel in the market. 

Meanwhile, Brent also has the same trend and condition. The Brent contract rose by 0.1% to $77.83 a barrel in the market as it becomes an attention for the traders before taking a further action. 

United States crude stockpiles fell by 5.1 million barrels last week. A data from the Energy Information Administration showed, following a drop of 4.6 million barrels in the previous week and below estimates of a decline of 1.5 million barrels.

OPEC+ Do the Production Cuts

There is a Thursday's positive news came from the comments from Russian Deputy Prime Minister Alexander Novak. He used to be Russia's state energy minister and stated about the price balance.

He added OPEC+ is a leading oil producer to introduce further oil production cuts. However, crucially it is added the cartel that can always adjust its policies.

The Organization of the Petroleum Exporting Countries and also the allies (including Russia) that is known as OPEC+, announced something surprising. They did the output cuts earlier this month.

Earlier crude weakness was due to jitters about the United States economic downturn. This situation is about to result in a drop, especially for the crude demand in the world's biggest energy consumer.

US Gross Domestic Product Increase 

These concerns added into Thursday after data showed that U.S. gross domestic product rose and reached the annual rate of 1.1% especially in the first quarter of this year.

Overall, the situation also showed a sharp decline from growth of 2.6% in the final three months of 2022. This can be seen clearly from many data released lately by several parties. 

Economists had forecast that the reading would reach 2.0%. That was adding to numerous signs that the Federal Reserve's aggressive interest rate hikes over the past year may be done.

The aim is to cool inflation, but those have hurt growt. That is why; the related institutions should take the right actions ahead. 



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