Gold prices showed little movement on Thursday after enduring four consecutive days of losses, as traders remained cautious due to uncertainty surrounding the Federal Reserve’s forthcoming interest rate decision.
Yesterday, bullion prices briefly hit their lowest point in three months following Federal Reserve Chair Jerome Powell’s testimony before the House Financial Services Committee. Powell indicated that interest rates may need to rise to address inflation concerns.
The market now awaits his testimony before the Senate Banking Committee for further insight into future rate hikes, which could impact gold prices given the metal’s sensitivity to U.S. yields.
“Gold gets little relief as markets bet on July rate hike”
Spot gold steadied at $1,933.63 per ounce, while gold futures slightly declined to $1,943.80 per ounce at 20:13 ET (00:13 GMT). Both instruments briefly dipped below $1,920 and $1,930 per ounce, respectively, following Powell’s comments on Wednesday.
Although the Fed chief did not provide explicit signals about the next rate hike, his stance on persistently high inflation, combined with hawkish indications from the Fed in the previous week, reinforced expectations of a minimum 25 basis point increase in July.
Market trends in Fed Fund futures prices suggest a more than 70% likelihood of a rate hike next month.
The possibility of further U.S. interest rate increases has exerted significant pressure on gold over the past month, given that it raises the opportunity cost of holding the precious metal.
While gold has maintained a trading range between $1,930 and $2,000 over the past month, analysts anticipate a potential downward breakout, especially as the dollar gains strength amid uncertainty surrounding the Federal Reserve.
“Other precious metals were also nursing steep losses this week.”
Platinum and silver futures steadied on Thursday after reaching their lowest points in three months during the previous session.
Meanwhile, copper prices experienced a slight increase for the third consecutive day, driven by optimism regarding ongoing stimulus measures in China, which are expected to bolster demand for the red metal throughout the year. Copper futures rose by 0.1% to $3.9805 per pound and traded close to a one-month high.
China recently adjusted its benchmark loan prime rate, and further monetary policy easing is anticipated as the nation grapples with efforts to strengthen its slowing economic recovery.
While some traders were disappointed with the magnitude of the rate cut, it reinforced expectations of additional stimulus measures being implemented to support economic growth.
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