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Gold steadies near three-month lows as all eyes remain on Fed Chair

Spot gold rose by 0.1% to USD 1,915.22 per ounce, hovering close to its lowest level since March 16 at USD 1,910

Gold held near three-month lows in the fourth week of June 2023, as strong economic readings from the United States offset the bullion’s traditional safe-haven status, as traders positioned for the US Federal Reserve Chair Jerome Powell’s speech and more data for clues on rate hikes.

Spot gold rose by 0.1% to USD 1,915.22 per ounce, hovering close to its lowest level since March 16 at USD 1,910. US gold futures stayed flat at USD 1,924.10.

“Strong economic data (in the U.S.) strengthened the dollar to send gold back towards its June-low overnight,” said Matt Simpson, senior market analyst at City Index, while interacting with Reuters, as the expert added that the bullion appeared to be technically driven with bears booking profits.

The latest data indicated that the American economy remained on solid footing, which could lead to more rate hikes to bring down domestic inflation.

Investors now expect a 77% chance of a rate hike in July 2023, with frequent rate cuts seen from March 2024 onwards, predicted CME Group’s Fedwatch tool, as it further stated that most major American banks were expecting a 25-basis-point rate hike.

As per the market theories, high-interest rates often discourage investing in non-yielding gold.

The Fed will publish minutes of its June 13-14 meeting on July 5, while holding its Federal Open Market Committee (FOMC) on possible interest rate changes from July 25-26.

Investors will have an eye over the Personal Consumption Expenditure (PCE) price index data for May 2023, along with the stats on the weekly jobless claims for the week ended June 23.

Gold might not see any big moves even after the PCE data’s publication, unless the CPI witnesses sudden volatility, Simpson highlighted, while noting that the Federal Reserve could maintain a hawkish approach to tame the inflation as it still remains above the central bank’s 2% yearly target.

Talking about Jerome Powell, the Fed Chair will address an event in Portugal, along with Bank of England’s Andrew Bailey, European Central Bank’s Christine Lagarde and Bank of Japan’s Kazuo Ueda.

The profits of the industrial firms in China (world’s largest gold consumer), tumbled 18.8% in the first five months of 2023, thus reinforcing market expectations of further policy support.

Spot silver fell 0.1% to USD 22.87 per ounce, platinum was down 0.8% while palladium fell nearly 1% to USD 1,283.06.

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