Gold Prices Trade Higher, Less Volatility Expected

Gold prices edged higher on Monday despite negative cues and amid expectations of less aggressive interest rate increases by the Federal Reserve.

Gold futures rose 0.2% to $1,830.10 per ounce, while spot gold last traded at $1,823.95 per ounce. On the other hand, silver weakened, with silver futures trading 0.2% lower at $24.18 per ounce, while spot silver last stood at $23.96 per ounce.

Volatility in precious metals is expected to be less on Monday as most markets remained closed for a holiday.

In 2022, the prices of the yellow metal closed 0.5% lower, despite the US central bank’s aggressive rate hikes, as the dollar climbed and became investors’ safe haven.

Gold to Stay in the Green, Gains May Be Limited

Gold finished the previous year slightly better, recovering losses from 2021. It has gained about $200 after hitting two-year lows in September on the possibility that the Fed will slow down on raising interest rates.

Gains in gold prices have been limited as the Fed’s aggressive rate hikes weakened demand for the non-yielding precious metal. Still, with uncertainties from China, gold prices are expected to stay up, although the central bank’s rate hike plan may keep the surge in check.

Investors also see other central banks increasing interest rates this year to curb inflation.

The yellow metal was also stable on the last day of 2022 amid thin volume following Christmas and New Year holidays. However, silver experienced some volatility after the move in base metals and the US dollar index caused by COVID-related developments in China.

Following positive US growth data and an easing in inflation, investors will likely focus on the country’s upcoming employment data and manufacturing purchasing managers’ index (PMI) from major economies.

The US is set to report employment data, which is anticipated to show strength in the country’s labor market through 2022, despite the aggressive tightening in monetary policy.

China’s situation will also be significant due to concerns over the increase in COVID cases amid the country’s move to ease restrictions.