As the dollar gains strength, gold prices continue to decline

22 Jun 2022 , 09:51 AM

Gold prices fell on Wednesday (22-06-2022) as the dollar strengthened, but the metal remained in a tight range as investors anticipated further clues from major central banks on their monetary policy objectives, particularly from the Federal Reserve of the United States.

By 02:31 GMT, spot gold had lost 0.3 % of its value and was trading at $1,827.03 per ounce. Gold futures in the United States fell 0.6 % to $1,828.10.

Bullion traded in dollars is now more expensive for purchasers holding foreign currencies as the currency climbed approaching recent two-decade levels. 

According to OANDA Senior Analyst Jeffrey Halley, “gold seems comfortable to trade inversely to the U.S. dollar in a sideways range at the moment. We’ll need a significant directional move from the greenback to alter that.

Market players are also watching this week’s testimony by Fed Chair Jerome Powell in Washington, D.C. “If Powell appears hawkish tonight, the U.S. currency may once again strengthen as rates increase. Gold would be pushed down as a result of this. Otherwise, I anticipate little influence “Halley threw in.

According to a Reuters poll, the Fed will likely raise rates by 75 basis points (bps) in July, followed by a 50-bps boost in September, and won’t return to quarter-point increases until November at the earliest.

The opportunity cost of owning gold, which pays nothing, rises when interest rates and bond yields rise. Meanwhile, according to a draught document, gold might be one of the assets targeted in a possible future wave of European Union sanctions on Russia.

According to Reuters’ technical expert Wang Tao, spot gold may test a support at $1,821 per ounce, with a significant risk of breaking below this level and dropping to $1,812.  Spot silver prices decreased 1% to $21.45 an ounce, platinum prices dropped 7% to $930.91, and palladium prices fell 8% to $1,862.40.