Gold Prices Struggle to Recover, Market Awaits Fed Direction
Gold prices moved relatively flat on Wednesday (July 1), as US Treasury yields rose and expectations mounted that the Federal Reserve could raise interest rates again. This situation dampened gold's appeal, as the precious metal offers no yield.
Spot gold edged up 0.2% to US$4,015.21 per ounce, after hitting its lowest level since November at US$3,942.99 per ounce in the previous session. Meanwhile, US gold futures for August delivery fell 0.2% to US$4,031.70 per ounce.
On Tuesday, gold posted its first quarterly loss since January 2024. Pressure on gold increased after a sell-off in the US bond market pushed the 10-year Treasury yield up as much as 9 basis points before easing slightly. On Wednesday, the yield rose another 4 basis points to 4.465%.
UBS analyst Giovanni Staunovo believes gold's decline was influenced by comments by Cleveland Fed President Beth Hammack, who left open the possibility of an interest rate hike if inflationary pressures persist. According to the CME FedWatch Tool, market participants now estimate a nearly 67% chance that the Fed will raise interest rates in September.
Expectations of an interest rate hike are also dampening investment demand for gold. According to Staunovo, gold ETF holdings have seen another outflow in recent days, while price volatility is expected to increase ahead of the release of key US economic data this week.
The market now awaits the ADP Employment Change data on Wednesday and the Nonfarm Payrolls report on Thursday for new clues regarding the Fed's policy direction. Investors are also closely watching the ECB's annual conference in Sintra, where Fed Chair Kevin Warsh and ECB President Christine Lagarde are scheduled to speak. Geopolitical concerns remain after Iran announced it would not meet directly with senior US envoys amid the latest diplomatic efforts.
Source: Newsmaker.id
