Gold hovers near mid-March low on dollar strength, hawkish Fed

Shafaq News / Gold prices lingered near a Mid-March low on Thursday, dragged down by a stronger dollar and hawkish comments from U.S. Federal Reserve Chair Jerome Powell.

Spot gold fell 0.2% to $1,903.19 per ounce by 0340 GMT, near a mid-March low hit on Wednesday.

U.S. gold futures fell 0.5% to $1,911.70.

The dollar index was higher, making gold expensive for holders of other currencies. [USD/]

Powell’s hawkish remarks reinforced interest rates going higher for longer, with a higher opportunity cost of holding gold dimming the appeal of gold, said OCBC FX strategist Christopher Wong.

Powell suggested another two rate hikes to the Fed funds target rate were likely, and he did not see inflation abating to the 2% target until 2025.

Investors now see an 81% chance of a 25-basis point rate hike in July before rates holding steady for the remainder of the year, according to CME’s Fedwatch tool.

High interest rates discourage investing in non-yielding gold.

Market participants are now awaiting initial U.S. jobless claims and final first-quarter GDP numbers due later in the day, along with personal consumption expenditures (PCE) data for May on Friday.

Analysts polled by Reuters expect the core PCE, the Fed’s favored inflation gauge, to be 4.7% on a year-over-year basis, well above the Fed’s 2% target.

Asian shares were subdued on the premise of higher interest rates, while the Japanese yen and the Chinese yuan struggled to lift from lows amid fears of official intervention. [MKTS/GLOB]

China’s factory activity likely contracted for a third straight month in June, albeit at a marginally slower pace, a Reuters poll showed.

Spot silver was little changes at $22.71 per ounce while platinum rose 0.2% to $912.52.

Palladium rose 0.6% to $1,256.83 per ounce, after hitting a 4-1/2-year low in the previous session.

(Reuters)