Gold Prices Slide as Fed Minutes Signal Expectations of Higher Rates - News18

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Last Updated: July 06, 2023, 02:16 IST

New York, United States of America (USA)

Gold is highly sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding non-yielding bullion.

Gold is highly sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding non-yielding bullion.

Spot gold was down 0.5% at $1,916.49 per ounce by 02:32 p.m. EDT (1832 GMT). U.S. gold futures settled 0.1% lower at $1,927.10.

Gold prices fell on Wednesday, weighed down by an uptick in the dollar and U.S. Treasury yields after minutes from the Federal Reserve’s June policy meeting cemented expectations that rates will stay higher for longer.

Spot gold was down 0.5% at $1,916.49 per ounce by 02:32 p.m. EDT (1832 GMT). U.S. gold futures settled 0.1% lower at $1,927.10.

“Gold slumps to day’s lows after Fed minutes showed that the ‘pause’ in June was simply the path of least dissent and almost the entire committee expected ultimately higher rates," said Tai Wong, a New York-based independent metals trader.

“The upcoming JOLTS report and payrolls data will have much greater impact, especially if they are weaker than expected."

A united Fed agreed to hold interest rates steady at the June meeting, according to meeting minutes released on Wednesday, even as the vast bulk expected they would eventually need to tighten policy further.

Benchmark U.S. 10-year Treasury yields jumped to a near four-month peak after the release, while the dollar rose 0.3% against its rivals.

Traders are pricing in an 89% chance of a 25-basis-point hike from the Fed in the July meeting after last month’s pause, per CME’s Fedwatch tool.

Gold is highly sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding non-yielding bullion.

Investors focus now shifts to the U.S. Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS, and ADP, jobless claims on Thursday before Friday’s non-farm payrolls report.

Traders also kept a close watch on updates about China’s export controls on semiconductor metals as it ramps up a tech fight with the United States ahead of U.S. Treasury Secretary Janet Yellen Beijing visit.

Spot silver rose 0.8% to $23.12 per ounce, platinum eased 0.1% to $914.11 while palladium climbed 1% to $1,255.78.

(This story has not been edited by News18 staff and is published from a syndicated news agency feed - Reuters)
Rohit
Rohit is a News18.com journalist with a passion for world affairs and a love for football. Follow him on Twitter at @heis_rohit...Read More
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