Gold Prices Steadied As Prospects For Further U.S. Interest Rate Increases

Gold prices steadied as prospects for further U.S. interest rate increases put the brakes on a recent rally. Gold prices moved off session lows shrugging off the prospect of further Federal Reserve rate hikes amid upbeat labor market data pointing to underlying strength in the US economy. The recent rally in gold futures came under pressure amid investor concerns that continued upbeat US economic data could strengthen the case for the Fed to raise rates more than currently priced in.

Private payrolls grew by 250,000 for December, a sharp increase from the 185,000 private jobs created in the previous month, according to a report released Wednesday by ADP and Moody's Analytics. In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to other interest-bearing assets such as bonds.

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