Monday, July 4

Gold dips after US Fed chief pledges to keep up inflation fight


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Gold prices eased on Thursday, pressured

by expectations of aggressive interest rate increases after the

US Federal Reserve chief doubled down on the central bank’s

fight against inflation.

Spot gold fell 0.2% to $1,834.33 per ounce by 0733

GMT. US gold futures eased 0.1% to $1,835.60.

“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,

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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 bonds yield raise the opportunity

cost of holding bullion, which yields no interest.

Powell is due to testify again in Washington DC 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

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weeks than not,” said Michael Langford, director at corporate

advisory AirGuide.

“Gold is crypto for 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 firmed at elevated levels after some

losses in the previous session, hurting demand for

greenback-priced bullion among buyers holding other currencies.

Spot silver dropped 0.5% to $21.28 per ounce,

platinum fell 0.2% to $924.22, and palladium rose

0.6% to $1,874.23.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by

Shailesh Kuber and Subhranshu Sahu)

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