After fluctuating within a narrow range over the holiday trading lull, gold prices maintained stable on Tuesday as market players awaited further guidance from this week’s appearance by U.S. Federal Reserve Chair Jerome Powell on Capitol Hill.
By 0248 GMT, spot gold was unchanged at $1,949.59 per ounce, while U.S. gold futures were down 0.5% at $1,961.20.
As sporadic bounces over the previous month have not produced any follow-through, “gold prices feel weary lately… This is a result of higher Treasury yields, which have restrained the upside potential of non-yielding yellow metal, according to IG market analyst Yeap Jun Rong. [US/]
Following the Fed’s hawkish pause on tightening monetary policy last week, investors are now focusing on Powell’s congressional testimony on Wednesday and Thursday for additional guidance on interest rates.
Although interest rate increases increase the opportunity cost of owning non-yielding bullion, gold is nevertheless seen as an inflation hedge.
The latest pushback by the central bank has disappointed investors because expectations had previously priced in a more dovish outcome from the Fed, which translates to some unloading in place, said IG’s Jun Rong.
The yuan fell as China dropped two benchmark lending interest rates for the first time in ten months, while the U.S. dollar surged broadly on Tuesday and reached a seven-month high against the yen. [USD/]
The head of Slovakia’s central bank said on Monday that the European Central Bank should raise interest rates once more in July since inflation risks are tilted in favour of more likely outcomes. On Thursday, the Bank of England is anticipated to hike rates by an additional 25 basis points.
Palladium dropped 1.2% to $1,390.15 while spot silver dipped 0.1% to $23.911 per ounce, among other precious metals.
At $970.72, platinum was down 0.5% and headed for a third straight session of losses.