Gold prices increase in early trade due to a weaker dollar

26 Jun 2023 , 11:43 AM

Although the likelihood of further interest rate increases by the Federal Reserve this year to combat sticky inflation impacted on bullion’s attractiveness, gold prices nudged up in early Asian trade on Monday. This increase was aided by a lower U.S. dollar.

Spot gold increased by 0.3% to $1,926.29 per ounce. U.S. gold futures also increased by 0.3% to $1,936.10 per ounce.

The dollar index fell by 0.2%, increasing the appeal of gold to buyers using foreign currencies.

On the back of multiple Fed officials’ aggressive remarks, gold lost 1.8% last week.

Fed Chair Jerome Powell hinted at future rate increases during testimony to Congress last week, but he also swore that the institution would exercise care.

Two additional rate increases this year, according to San Francisco Fed Bank President Mary Daly, are a ‘very reasonable’ prediction.

Investors currently anticipate a 72% chance of a rate increase in July, with rate decreases beginning in 2024.

Despite the fact that services growth slowed down for the first time this year in June, U.S. business activity nonetheless hit a three-month low, and second-quarter economic growth increased slightly.

In other news, Masato Kanda, Japan’s top currency diplomat, said the nation would not rule out any possible responses to currency movements and increased cautions against recent yen depreciation that was ‘rapid and one-sided.’

As investors believed a weekend rebellion by Russian mercenaries prompted concerns about stability and crude supplies, stocks fell and oil soared. 

Platinum increased by 0.8% to $924.13, while spot silver increased by 0.7% to $22.57 per ounce. To $1,297.63, palladium increased 1%. On Thursday, the metal dropped to a four-year low of $1,269.09 per ounce.

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