By Arundhati Sarkar
(Reuters) – Gold prices slipped to a more than three-month low on Wednesday after upbeat U.S. economic data cemented expectations of more rate hikes this year as investors positioned for a speech by Federal Reserve Chair Jerome Powell’s later in the day.
Spot gold fell 0.2% to $1,909.15 per ounce by 0816 GMT, having hit its lowest since March 16 earlier in the session. U.S. gold futures dipped 0.3% to $1,918.20.
“Good U.S. economic data remains a headwind for the yellow metal, as it likely keeps Fed officials reiterating a hawkish tone,” UBS analyst Giovanni Staunovo said.
U.S. consumer confidence increased in June to the highest level in nearly 1-1/2 years amid renewed labor market optimism, while business spending appeared to hold up in May, indicating the economy remained on a solid footing despite fears of a recession.
Investors’ focus has shifted to Powell’s speech at an afternoon policy panel before a European Central Bank Forum in Portugal. The U.S. central bank signaled this month that borrowing costs may still need to rise by as much as half a percentage point by the end of this year.
High interest rates discourage traders from investing in non-yielding gold.
“We’ve seen increasing signs that the U.S. may evade an outright recession … Our forecasts see gold falling closer to $1,850 levels this year based on this assumption and that interest rates might stay higher for slightly longer than the market was expecting,” Harshal Barot, senior consultant at Metals Focus, said.
The dollar index inched up 0.1%, making gold less attractive for overseas buyers.
Among other metals, spot silver fell 0.7% to $22.7283 per ounce, platinum dropped 1.3% to $912.70, and palladium lost 2.6% to $1,262.58.
(Reporting by Arundhati Sarkar and Seher Dareen in Bengaluru; editing by John Stonestreet)
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Source: The Print
