Gold Price Maintains Near Mid-March Lows Due to Strong Dollar and Optimistic Fed Comments

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The price of gold maintains its proximity to its lowest level since mid-March due to the strength of the dollar and optimistic comments from the Fed. Today at 05:42, the price of gold remained close to its lowest level since mid-March, pulled down by the strength of the dollar and optimistic remarks from Federal Reserve Chairman Jerome Powell.

Powell’s statements in favor of a strict monetary policy have reinforced expectations of higher interest rates in the longer term, increasing the opportunity cost of holding gold. This reduces the appeal of gold, said Christopher Wong, strategist at OCBC FX. Powell suggested that two more increases in the federal funds rate were likely and that he did not anticipate a decrease in inflation until reaching the 2% target by 2025.

Spot gold decreased by 0.2% to $1,903.19 per ounce at 03:40 GMT, nearing its lowest level since mid-March reached on Wednesday. US gold futures fell by 0.5% to $1,911.70. The dollar index rose, making gold more expensive for holders of other currencies.

According to CME’s Fedwatch tool, 81% of investors believe a 25 basis point interest rate hike is likely in July, and rates are expected to remain steady until the end of the year. High interest rates discourage investment in gold, which does not generate any yield.

Market participants are now awaiting data on initial jobless claims in the United States and final GDP figures for the first quarter, expected later in the day, as well as personal consumption expenditure (PCE) data for May, to be released on Friday. According to analysts surveyed by Reuters, the Fed’s preferred inflation gauge, the core personal consumption expenditures price index (PCE), is expected to be 4.7% on a year-on-year basis, well above the Fed’s 2% target.

Asian stocks were moderate due to rising interest rates, while the Japanese yen and the Chinese yuan struggled to recover from their lows due to fears of official intervention. According to a Reuters survey, China’s manufacturing activity likely contracted for the third consecutive month in June, albeit slightly less pronounced.

  • The spot silver price remained virtually unchanged at $22.71 per ounce, while the price of platinum increased by 0.2% to $912.52.
  • The price of palladium rose by 0.6% to $1,256.83 per ounce, after reaching its lowest level in 4 and a half years in the previous session.
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