Gold eyes break below $1,900 support as Fed fears mount
2023.06.29 20:59
© Reuters.
Investing.com– Gold prices moved little on Friday, and were nursing steep losses for June as strong U.S. economic data pushed up risk appetite and also fed into concerns over more interest rate hikes by the Federal Reserve.
The yellow metal tumbled to three-month lows this week following a string of hawkish signals from Fed officials, most notably Chair Jerome Powell, who reiterated that the bank could hike rates at least two more times this year.
A sharp upward revision in U.S. also showed that the world’s largest economy was more resilient than expected, denting gold’s safe haven appeal. It also pushed up concerns that the Fed will have enough economic headroom to keep raising rates- a scenario that also heralds more pressure on gold.
was flat at $1,908.26 an ounce, while fell 0.1% to $1,916.05 an ounce by 20:26 ET (00:26 GMT). Both contracts were down 2.7% and 3.3% in June, respectively.
Gold eyes break below $1,900
The yellow metal was now eyeing a sustained drop below the key $1,900 support level- an event that analysts say could trigger some technical selling.
Spot gold had fallen as far as $1,891 on Thursday before recouping some losses, but remained close to making a more concrete foray into the $1,800s. Gold futures had just avoided a drop below $1,900 on Thursday.
Strength in the – which hit a two-week high after the positive GDP data and Powell’s comments- also pressured bullion prices.
The prospect of rising interest rates bodes poorly for gold, given that it increases the opportunity cost of buying the yellow metal over the dollar and government debt. This notion battered gold through 2022, and has also weighed on the metal in 2023.
In addition to the Fed, hawkish signals from the European Central Bank and the Bank of England also pressured the yellow metal this week, especially as inflation in the two countries remained high.
Copper steadies before China PMIs
Copper prices moved little on Friday, in anticipation of key (PMI) data from China, which is set to offer more cues on an economic recovery in the world’s largest copper importer.
steadied around $3.6990 a pound, but were headed for a 2.7% loss this week. Still, futures were up nearly 2% for June, having recovered from six-month lows hit through May.
China’s is expected to have contracted through June, while growth in the is expected to have slowed. Signs of a weakening economic rebound in the country heavily pressured copper prices this year.