Gold Falls for Three Straight Days, Here's the Cause!
Gold prices fell for the third consecutive day today, Wednesday (July 1st), amid growing concerns that the Federal Reserve could further tighten its monetary policy. This signal contributed to the strengthening of the US dollar and prompted market participants to closely monitor developments in the talks between the United States and Iran.
Spot gold weakened below US$3,980 per ounce after falling around 2% in the previous two sessions. Gold prices even touched their lowest level since November after Cleveland Fed President Beth Hammack stated that she hadn't seen much evidence that current interest rates were sufficient to support economic growth.
Hammack also assessed that the US central bank may still need to raise interest rates to return inflation to its 2% target. Further clues regarding the direction of US interest rates are expected to come from Fed Chairman Kevin Warsh's speech at the European Central Bank's annual symposium in Sintra, Portugal.
From a geopolitical perspective, the market is also monitoring developments in the US-Iran talks. US envoys Jared Kushner and Steve Witkoff reportedly held positive talks with regional leaders in Qatar, while technical talks with Iran reportedly continued.
Throughout the second quarter, gold plummeted 14%, posting its worst performance since 2013. After briefly hitting a record in January, the precious metal was pressured by speculation that the Fed could raise interest rates this year to address persistently stubborn inflation, even though energy prices have weakened following the interim US-Iran deal.
US economic data also showed considerable resilience. Job openings in May changed little, indicating stable labor demand amid rising payrolls. This provides room for the Fed to maintain interest rates for longer while assessing the direction of inflation.
Technically, gold also faced weakening signals after the 200-day moving average fell below the 50-day moving average. This pattern is known as a death cross and is often seen as a sign of the formation of a long-term downtrend. At 2:03 p.m. Singapore time, spot gold fell 0.8% to US$3,977.23 per ounce, while the Bloomberg US Dollar Index rose 0.1%. Silver weakened 1.7% to US$57.63 per ounce, while platinum and palladium also fell. (asd)*
Source: Newsmaker.id
