Gold prices slipped 1% to their lowest level in more than two weeks, weighed down by a stronger dollar and higher bond yields, while traders looked forward to U.S. inflation data due later this week.
Spot gold fell 0.9% to $2,299.40 per ounce by 10:03 a.m. ET (1403 GMT), hitting its lowest since June 10. U.S. gold futures also fell 0.8% to $2,311.30.
“At this point, the market may very well be responding to the firmer U.S. dollar, and we continue to price in the possibility that the U.S. Federal Reserve is unlikely to move (interest rates) earlier in the summer,” said Bart Melek, head of commodity strategies at TD Securities.
The dollar rose 0.4% to a near two-month peak against its rivals, making gold more expensive for other currency holders, while benchmark U.S. 10-year yields hit a near two-week high.
Focus this week will be on the U.S. personal consumption expenditures (PCE) price index, Fed’s preferred inflation gauge, that could shed more light on the U.S. interest rate path.
Also on the radar, U.S. first-quarter gross domestic product estimates and a crucial debate between U.S. President Joe Biden and Republican rival Donald Trump on Thursday.
Data out on Tuesday showed U.S. consumer confidence eased in June amid worries about the economic outlook, but households remained upbeat about the labor market and expected inflation to moderate over the next year.
Fed Governor Michelle Bowman on Tuesday reiterated her view that holding the policy rate steady “for some time” will probably be enough to bring inflation under control, but also repeated her willingness to raise borrowing costs if needed.
Higher interest rates increase the opportunity cost of holding non-yielding bullion.
Spot silver fell 0.5% to $28.79, palladium lost 2.8% to $921.75, while platinum climbed 1.7% to $998.75.
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Published: 26 Jun 2024, 11:00 PM IST
### Factors Contributing to Gold Price Decline
The recent drop in gold prices can be attributed to a stronger dollar and higher bond yields. These factors have made gold more expensive for investors holding other currencies, leading to a decrease in demand for the precious metal.
### Market Sentiment and Expectations
Traders are closely monitoring U.S. inflation data scheduled for later this week, as it could provide further clarity on the Federal Reserve’s interest rate decisions. The ongoing debate between U.S. President Joe Biden and Republican rival Donald Trump has also captured market attention, influencing investor sentiment.
### Policy Statements and Economic Indicators
Statements from Fed Governor Michelle Bowman about maintaining policy rates and potential adjustments based on inflation further add to the market uncertainty. Additionally, U.S. economic indicators, such as personal consumption expenditures and GDP estimates, are crucial for understanding the overall economic outlook and its impact on gold prices.
### Impact on Precious Metals
While gold prices have declined, other precious metals like silver, palladium, and platinum have shown mixed movements. Silver and palladium experienced decreases, while platinum saw an increase, highlighting varying investor preferences within the precious metals market.
