By Seher Dareen
(Reuters) – Gold held near three-month lows on Wednesday after strong U.S. economic readings offset the bullion’s traditional safe-haven status, while traders positioned for Federal Reserve Chair Jerome Powell’s speech and more data for clues on rate hikes.
Spot gold rose 0.1% to $1,915.45 per ounce by 0524 GMT, hovering close to its lowest level since March 16 at $1,910. U.S. gold futures were flat at $1,924.60.
“Strong economic data (in the U.S.) strengthened the dollar to send gold back towards its June-low overnight,” said Matt Simpson, senior market analyst at City Index, adding that bullion appeared to be technically driven with bears booking profits. [USD/]
Data on Tuesday indicating that the economy remained on solid footing could lead to more Fed rate hikes to bring down inflation.
Investors expect a 77% chance of a rate hike in July, with rate cuts seen from March 2024 onwards, per CME’s Fedwatch tool, with most major U.S. banks expecting a 25-basis-point rate hike.
High interest rates discourage investing in non-yielding gold.
The Fed will publish minutes of its June 13-14 meeting on July 5, while holding its Federal Open Market Committee (FOMC) on interest rates from July 25-26.
Investors will keenly watch Thursday’s personal consumption expenditure (PCE) price index data for May amongst other data.
Gold might not see any big moves after the PCE data unless the CPI sees any sudden moves, Simpson highlighted, noting that the Fed could maintain a hawkish narrative to tame inflation since it remains well above the central bank’s 2% target.
Powell will speak at a policy panel on Wednesday before the European Central Bank Forum on Central Banking in Sintra along with other central bank members.
If macro indicators continue to be supportive of further monetary policy tightening, gold could test the psychological $1,900 level, said Tim Waterer, chief market analyst at KCM Trade in a note.
Spot silver rose 0.2% to $22.93 per ounce, platinum fell 0.9% to $916.83 while palladium dropped 1.1% to $1,281.48.
(Reporting by Seher Dareen in Bengaluru; Editing by Sohini Goswami, Sherry Jacob-Phillips, and Janane Venkatraman)
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Source: The Print
