Gold experienced a dip on Wednesday as robust U.S. business activity data emerged. Despite facing headwinds from a weakened dollar, the yellow metal saw a 0.7% decline, settling at $2,014.56 per ounce by 19:16 GMT. This downturn positions gold for its most challenging session in a week. Concurrently, U.S. gold futures settled 0.5% lower at $2,016.00.
A recent S&P Global survey revealed that U.S. business activity witnessed an upswing in January, accompanied by signs of inflation abatement. The positive trajectory in the U.S. economy, coupled with resistance from central bank officials, prompts a reevaluation among investors regarding the pace at which the Federal Reserve might initiate interest rate cuts this year.
While a formidable U.S. economy may contribute to downward pressure on gold, the weakened dollar served as a mitigating factor. The dollar slipped 0.4% against its counterparts, rendering greenback-priced bullion more affordable for overseas buyers.
China, grappling with persistent market pessimism, is taking steps to counter the prevailing negative sentiment. The country’s central bank announced a substantial cut to bank reserves, infusing approximately $140 billion into the banking system. This move is seen as an attempt to alleviate the pervasive gloom affecting Chinese markets, which, in turn, impacts the broader U.S. dollar.
Investor attention now pivots to crucial economic indicators, including the fourth-quarter advance U.S. GDP estimates scheduled for Thursday. Additionally, the personal consumption expenditure data on Friday will be closely scrutinized as market participants seek insights into the economic landscape.
In contrast to gold’s decline, spot silver experienced a 1.2% uptick, reaching $22.7 per ounce. Platinum saw a modest increase of 0.23%, settling at $902.18, while palladium recorded a notable 1.65% rise, reaching $963.59 per ounce.