Gold Under Pressure, Approaching US$4,000
Gold prices weakened again on Wednesday (June 24th), approaching their lowest level in almost two weeks and testing the psychological level of US$4,000 per troy ounce. The main pressure came from the strengthening US dollar and increasing market expectations for a Federal Reserve interest rate hike.
Spot gold fell 1.2% to US$4,062.72 per troy ounce at 11:55 p.m. ET (03:55 GMT). Meanwhile, US gold futures fell further, 1.7%, to US$4,079.87 per troy ounce.
This weakening extended pressure on gold, which has fallen in five of the last six sessions. Gold also recorded three consecutive weeks of declines, indicating that market sentiment toward the precious metal remains quite weak.
The strengthening of the US dollar index (DXY) to its highest level in 13 months further pressured gold prices. A stronger dollar makes gold more expensive for holders of other currencies. On the other hand, expectations of higher interest rates also increase the opportunity cost of holding gold, as it offers no yield.
The market now estimates a roughly 70% chance that the Fed will raise interest rates in September. In fact, market participants are also starting to fully factor in the possibility of an additional rate hike in December, following hawkish comments from Fed officials and the outcome of last week's policy meeting.
Pressure on gold is also growing as concerns about supply disruptions in the Middle East begin to ease. Investors are still monitoring developments in diplomacy between the United States and Iran, particularly regarding efforts to normalize energy flows through the Strait of Hormuz. Although geopolitical risks have not completely disappeared, market focus is now on the US PCE inflation data, which will be released Thursday, as a clue to the Fed's next policy direction. (Asd)
Source: Newsmaker.id
