Fed president suggests inflation fight is not over as employment numbers show signs of strengthening; more data due to be released Friday
Gold prices declined about 0.5% to just below $2,650 an ounce after Richmond Federal Reserve President Thomas Barkin spoke during an economic conference Wednesday and said there is “still work to do on inflation.”
Last week, traders anticipated a 50 basis point cut during the upcoming Nov. 7 FOMC meeting; however, that sentiment has shifted to expecting a smaller quarter-point reduction.
The Fed reportedly lowered interest rates at last month’s meeting after a weakening job market and improving inflation data had been monitored.
More U.S. jobs data, including nonfarm payroll, unemployment rate, and hourly wages, will be reported on Friday before the market opens.
Silver prices on Thursday were down more than 1% and trading in the $31.45 range.
Zain Vawda, market analyst at Marketpulse by OANDA, told Reuters, “While there was some safe-haven buying following the announcement of the Iranian attack, the possibility that rate cuts might not be as aggressive as anticipated likely limited the gains and continue to do so.”
But some investors are still expecting notable increases in the price of precious metals amid numerous tailwinds, including heavy central bank buying related to de-dollarization efforts and economic easing cycles.
“Previously, we would suggest that 15% of one’s investment should go to gold,” said Bhargav Vaidya, a gold analyst. “But, now, since gold prices have started to give 18 to 20% return annually, the investment should go up to 25%.”
But some analysts are suggesting the U.S. dollar’s recent short-term strength has cooled off potential gains seen from a considerable escalation in the Middle East amid Israel’s fight against Hamas and Hezbollah.
The U.S. Dollar Index ($DXY) was moving higher for the fourth straight day on Thursday.
Written by Tim Zyla of The Jerusalem Post
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