A slightly stronger dollar weighed on gold prices on Wednesday, which had fallen from a 1-1/2-month high reached the previous session. Investors also gambled that recent U.S. economic data support a pause in the Federal Reserve’s rate-hike policy.
After reaching its highest level since May 24 at $1,984.19 on Tuesday, spot gold declined 0.1% to $1,976.05 per ounce by 3:50 GMT.
American gold futures were essentially unchanged at $1,980.
Holders of foreign currencies will now pay more for gold as the dollar index climbed from a more than one-year low hit on Tuesday. [USD/]
In contrast to the 0.5% increase predicted by economists in a Reuters survey, U.S. retail sales grew by 0.2% last month instead of 0.5%.
Even though a rate increase of 25 basis points is widely anticipated, the Fed is “expected to retain its hawkish tone, which could pose a challenge to gold’s upside,” according to Yeap Jun Rong, a market strategist at IG.
The anticipated rate increase to the range of 5.25%-5.50% on July 26 may be the Fed’s final increase during the current tightening cycle, according to 106 economists surveyed.
The opportunity cost of owning non-yielding bullion is reduced as interest rates decline.
In order to perhaps give more conviction to purchasers, gold prices may need to retake the important psychological level of $2,000, according to Yeap.
According to technical expert Wang Tao, the rally from Monday’s low of $1,945.65 appears too abrupt to continue, and the current correction may go as far as $1,961-$1,970.
As 10 industries, including the auto and steel industries, struggle with issues like insufficient demand and declining earnings, China announced that it would develop plans to stabilise growth in those industries.
Spot silver and platinum, among other metals, both decreased 0.1% to $25.06 and $982.22 per ounce, respectively.
Palladium dropped over 1% to $1,306.97 after climbing to its highest level since June 26 on Tuesday at $1,325.