After solid US statistics, gold has been stable near three-month lows

28 Jun 2023 , 11:11 AM

Although positive U.S. economic reports offered a compelling argument for higher rates, gold prices remained close to three-month lows as investors awaited clues from Federal Reserve Chair Jerome Powell and additional economic data for a direction on rate hikes.

Spot gold had not changed much and was trading at $1,913.82 per ounce, not far from the three-month low of $1,910 set on June 23. The price of U.S. gold futures was unchanged at $1,924.50.

The dollar index remained unchanged. 

In addition, new single-family home sales jumped more than anticipated in May, which raised predictions that the Fed would need to keep raising rates in order to get inflation down to its 2% objective.  U.S. consumer sentiment increased in June on the back of labour market optimism. Following the data, gold declined by up to 0.6%.

According to CME’s Fedwatch tool, investors anticipate a rate hike in July with a rate cut beginning in March 2024.

High interest rates deter investment in gold that doesn’t yield.

The personal consumption expenditure (PCE) price index data for May, the first quarter GDP statistics, and the weekly unemployment claims for the week ending June 23 will all be closely watched by investors on Thursday. Core-PCE is anticipated to remain at 0.4%.

At 13:30 GMT in Sintra, Fed Chair Powell will participate in a policy discussion before to the European Central Bank Forum on Central Banking.

Reuters was informed on Tuesday by sources that the ECB policymakers do not anticipate inflation to ease enough to put a stop to rate increases this summer.

Masato Kanda, Japan’s top currency ambassador, said authorities would respond appropriately if the yen went too far after the currency hit new seven-month lows against the dollar overnight.

Silver prices on the spot decreased by 0.1% to $22.86 an ounce, platinum declined by 0.7% to $918.57, and palladium increased by 0.1% to $1,296.88.

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