Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinWith US markets closed for the MLK holiday, gold futures slipped 0.3% in electronic trading but held near an 8-month high above $1,917.

Following last week's CPI that showed inflation falling in December for the first time since 2020, markets are recalibrating expectations for the end of the Fed's most aggressive rate-hike cycle since the 1980s. Fed fund futures markets now see a 91% likelihood of a quarter-point hike in Feb, the smallest in more than six months.

Slower rates hikes in coming months, perhaps with rate cuts in the second half of 2023 if the economy continues to ebb toward recession, would mean a weaker dollar and receding Treasury yields, both of which would be bullish for gold and silver.

Bank of America analysts are projecting the gold price to break above $2,000 in coming months behind the tailwinds of falling yields and a lower dollar. Global ETF powerhouse Wisdom Tree is now saying gold could push to record highs above $2,100 by year-end.

Near-term buying in China is also projected to support the gold price as the Chinese economy reopens after Covid closures and the Lunar New Year holiday season begins next month. Gold is considered an auspicious gift during this period.