Gold heads for fourth straight day of declines as aggressive Fed diminishes metal’s luster

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Gold weakened for a fourth day on Thursday as expectations of aggressive Federal Reserve action lowered the brilliance of the precious metal. Silver prices also softened, heading into their third consecutive day of falls.

Both metals have weakened this week as US stocks have sold while the US dollar has strengthened.

Price action
  • GC00 Gold Futures,
    + 0.28%
    for delivery in August they dropped $ 10.90, or 0.6%, to $ 1,806 an ounce. Gold prices have fallen for nine of the last ten trading sessions.

  • Payment futures SI00,
    for the July delivery it dropped 38 cents, or 1.8%, to $ 20.36 an ounce,

  • PL00 platinum futures,
    for the October delivery it fell $ 28, or 3.1%, to $ 881 per ounce.

  • Palladium futures PA00,
    for the September delivery they dropped $ 43, or 2.5%, to $ 1,897.

  • HG00 copper futures,
    for the September delivery it dropped 8 cents, or 2.2%, to $ 3.69 per pound.

What analysts say

A precious metals analyst said falling gold and silver prices this week have been a delayed reaction to the growing attitude of the Federal Reserve and other central banks.

“What we’re seeing here is a somewhat delayed reaction to the brutality we’ve seen from the U.S. central bank and more and more other central banks around the world,” said Bart Melek, global head of commodity strategy of TD Securities. , during a conversation with MarketWatch.

“Jerome Powell is going through with his European counterparts and the discussion of the day is inflation and what to do about it.”

The prospect of higher interest rates has slowed demand for gold because higher rates make bonds a more attractive investment compared, as gold does not deliver a return.

Powell said Wednesday that “there is no guarantee” that the Fed can return inflation to its 2% target without crashing the robust U.S. labor market. The president of the US Fed spoke at a roundtable during the ECB’s summer policy conference in Sintra, Portugal.

Melek added that he expects gold to continue to weaken as algorithmic traders such as commodity trading advisors increase bets against the yellow metal. The next level of technical support for gold is $ 1,795 per ounce.

Meanwhile, the May PCE inflation indicator, which is the preferred measure of Fed inflationary pressures in the United States, slightly reduced core inflation to 4.7%, while the overall figure remained unchanged at 6.3%. Consumer spending rose just 0.2% last month, an increase that was smaller than economists surveyed by FactSet had predicted. Meanwhile, weekly unemployment claims data showed that the number of Americans applying for unemployment benefits for the first time declined last week by 2,000.

Naeem Aslam, chief market analyst at AvaTrade, said he expects gold to remain volatile following the latest batch of U.S. data, as traders looking to hedge their risk in a highly uncertain environment should to help prevent the price of gold from “falling”. a cliff ”.

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