Gold prices tumble on Fed statements

Gold prices closed in the red today, Jan. 18, following the release of several US economic data and as investors assessed the latest statements by Federal Reserve officials.

The US Producer Price Index (PPI) shed 0.5% on a monthly basis in December 2022, surpassing projections for a 0.1% month-on-month (MoM) decline. During the same month, US retail sales contracted by 1.1% against forecasts for a 1% drop.

St. Louis Federal Reserve Bank President James Bullard said the central bank should lift interest rates further to ensure price pressures are subdued.

Elsewhere, Cleveland Fed President Loretta Mester stated that the central bank needs to increase rates slightly above the 5-5.25% range, in a bid to contain inflation.

Fed-funds futures reflected a more than 94% probability the Federal Open Market Committee (FOMC) will raise the benchmark rate by 25 basis points (bps) when it concludes a two-day meeting on Feb. 1.

In terms of trading, gold for February delivery slid 0.2%, or $2.90, to $1,907 an ounce at settlement of today’s session.

The US dollar index, which gauges the greenback's strength against a basket of six currencies, settled at 102.370 points at 10:00 pm Makkah time.