Sunday, July 3

Gold slips as dollar checks slide, Fed chief hardens policy stance


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Gold prices fell on Wednesday as the

dollar recovered slightly, piling pressure on greenback-priced

bullion along with firm Treasury yields and an aggressive

inflation stance by the US Federal Reserve chief.

Spot gold dropped 0.4% to $1,808.08 per ounce, by

0329 GMT. US gold futures slipped 0.6% to $1,807.10.

Gold has been consolidating since the end of last week but

the overall direction is down, towards about $1,750, said Ilya

Spivak, a currency strategist at DailyFX. “The question is when

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do we find fresh momentum to take us there?” Spivak said.

The dollar edged higher after a three-session slide,

increasing the appeal of gold for investors holding other

currencies.

“Gold’s very focused on rates and the outlook for monetary

policy, especially in the US,” Spivak said, adding that the

dollar was not done rallying.

Fed Chair Jerome Powell on Tuesday pledged that the US

central bank would ratchet interest rates as high as needed to

kill a surge in inflation that he said threatened the foundation

of the economy.

Benchmark US 10-year Treasury yields steadied after a

sharp rise in the previous session, hurting demand for

zero-yield gold.

The Fed has raised its benchmark policy rate by

three-quarters of a percentage point this year, and is on track

to increase it again in half-percentage-point increments at its

next two meetings in June and July.

Although seen as an inflation hedge, bullion is sensitive to

rising US short-term interest rates and bond yields, which

increase the opportunity cost of holding it.

Spot silver fell 0.7% to $21.46 per ounce, platinum

dipped 0.6% to $945.37, and palladium eased 1% to

$2,031.54.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by

Subhranshu Sahu)



financialpost.com