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PRECIOUS-Gold dips after Fed chief reaffirms inflation fight

Category: Economy

Date: 2022-06-23T06:20:58+0000
PRECIOUS-Gold dips after Fed chief reaffirms inflation fight

Shafaq News/ Gold prices inched lower on Thursday, pressured by expectations of aggressive interest rate hikes after the U.S. Federal Reserve chief doubled down on the central bank's fight against inflation.

Spot gold was down 0.2% at $1,832.91 per ounce by 0239 GMT. U.S. gold futures fell 0.2% to $1,834.30.

"With (Fed Chair Jerome) Powell pointing out overnight that 1% rises were a real possibility, it's a reminder of that constant pressure on gold prices from rising interest rates," said Michael McCarthy, chief strategy officer at Tiger Brokers, Australia.

When asked by a member of the Senate Banking Committee if the Fed could raise rates by as much as 100 basis points at once, Powell said he would never take anything off the table, and officials would make whatever moves were needed to restore price stability.

Gold is often viewed as a hedge against inflation and a safe haven during economic crises, like recession, but saw some gains after Powell's statement as Treasury yields bore the brunt of it.

Higher interest rates and bond yields raise the opportunity cost of holding bullion, which yields no interest.

Powell is due to testify again in Washington D.C. later on Thursday.

"Gold is expected to follow the commodity complex down. It is more likely for gold to trade below $1,800/oz in the next two weeks than not," said Michael Langford, director at corporate advisory AirGuide.

"Gold is crypto for (Baby) Boomers, it has no meaningful industrial usage and is a psychological store of value much in the same way crypto was for the younger generation."

The dollar steadied at elevated levels after some losses in the previous session, limiting demand for greenback-priced bullion among buyers holding other currencies.

Spot silver dipped 0.5% to $21.28 per ounce, platinum fell 0.3% to $923.62, and palladium was flat at $1,864.18.

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