Gold prices stagnant in early trade

6 Jun 2023 , 09:05 AM

After U.S. services sector data fueled expectations that the Federal Reserve could pause its monetary policy tightening cycle this month, gold prices were unchanged in early Asian trade on Tuesday.

Spot gold remained steady at $1,961.09 per ounce. Futures for U.S. gold increased 0.2% to $1,977.30.

After declining on Monday, the dollar index was unchanged, and the yield on 10-year Treasuries decreased to 3.683%. Bullion priced in US dollars is more expensive for international buyers due to a weaker dollar.

According to a study by the Institute for Supply Management, the U.S. services sector barely expanded in May as new orders slowed. This resulted in a three-year low in a measure of input costs paid by businesses, which could help the Fed battle inflation.

According to the FedWatch tool from CME Group, traders have assumed an 81.7% probability that the Fed will hold interest rates during its policy meeting on June 13–14.

In an economy with high-interest rates, non-interest-bearing bullion usually loses some of its appeal.

As a result of the recent suspension of the debt ceiling, investors are preparing for a rush of new U.S. government bond issuance as the Treasury prepares to quickly replenish its empty coffers.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust GLD, reported Monday that its holdings increased 0.15% to 939.56 tonnes from 938.11 tonnes on Friday.

The Reserve Bank of Australia announces its most recent interest rate decision on Tuesday, which is obviously the key event for Asian and Pacific markets but could also be of interest to those who follow the U.S. Federal Reserve.

Platinum declined 0.2% to $1,028.03 while spot silver eased 0.1% to $23.5595 per ounce. After falling in the previous session, palladium was slightly changed at $1,413.10.

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