The increase in USD and US government bond yields caused each ounce of gold to decrease by more than 20 USD in yesterday’s session.
At the end of the trading session on June 26, the world spot gold price decreased by nearly 22 USD, down to 2,297 USD per ounce. This is the lowest level since the session on June 10.
Analysts said the market fell due to a stronger USD, rising US government bond yields and investors waiting for US inflation data to be released this week.
“At this point, the market is probably just reacting to the strong greenback. We are still betting on the possibility that the Federal Reserve will not cut interest rates in the summer,” said Bart Melek, commodity strategist at TD Securities.
Dollar Index yesterday increased 0.4% to the highest in nearly 2 months compared to other major currencies. This makes gold expensive for buyers outside the US. The 10-year US government bond yield also set a new 2-week peak.
This week, the US will release the Personal Expenditures Price Index (PCE). This is the Fed’s preferred inflation measure, helping investors forecast the agency’s interest rate decisions.
The market is also interested in estimated first quarter GDP figures and the first debate between US President Joe Biden and Donald Trump today. Earlier this week, data showed that American consumer confidence fell in June, due to concerns about the economic outlook. Still, households remain optimistic about the labor market and forecast inflation to go down next year.
On June 25, Fed board of governors member Michelle Bowman said keeping interest rates stable “for a while longer” will help control inflation better. He even affirmed that he is ready to raise interest rates if necessary. Rising interest rates will make gold less attractive.
On the precious metals market, spot silver price yesterday decreased 0.1% to 28.8 USD per ounce. Palladium lost 2% to $929. Platinum decreased 3%, closing at 1,011 USD.
