Gold futures fall to a seven-week low as US Federal Reserve’s tough talk dampens rate cut hopes

gold futuresOn Wednesday (17th), it fell to a seven-week low again, as the US Federal Reserve (Fed) official’s tough talk made investors question the possibility of cutting interest rates this year, and the appreciation of the dollar weighed on the precious metals market.

• New York for June deliverygold futuresPrices fell $8.10, or 0.4%, to $1,984.90 an ounce, the lowest since March 29.

ICE dollar index (DXY) rose 0.2 percent to 102.80 on Wednesday, hitting a seven-week high. Jim Wyckoff, senior analyst at Kitco Metals, said the dollar jumped in part because comments from Fed officials remained largely hawkish, weighing on the precious metals.

Chicago Fed President Austan Goolsbee said it was too early to talk about a rate cut, while Cleveland Fed President Loretta Mester didn’t think rates were at a level where they could hold steady .

Economists polled by Reuters forecast the Fed would keep interest rates at current levels this year. Bond market traders estimate that the probability of a pause in rate hikes in June is about 67%, and there is still a chance of rate cuts at the end of the second half of the year.

UBS analyst Giovanni Staunovo said his team still expects gold prices to rise over the next 12 months, but the next rally may not happen until the Fed turns dovish.

Analysts at Stevens Report Research said inflation expectations continued to moderate, and with growing concerns that the debt ceiling issue could eventually push the U.S. economy into recession later this year.

U.S. President Joe Biden and House Speaker Kevin McCarthy both emphasized on Wednesday their intention to reach a deal soon to raise the debt limit.

Kitco Metals’ Wyckoff predicts that a default on U.S. debt will hurtgoldFavorable, but not everyone in the market agrees with this.

Copper prices recovered on Wednesday, shrugging off Tuesday’s 2.2 percent plunge.

Sevens Report’s analyst team said that weak copper prices never coincide with a strong global economy or a continued rise in risk assets, which means that the economy has cracked and the future may be more painful.

Comex Metals Commodity Trading

• delivered in julySilver futuresIt inched up 0.1 cent to $23.90 an ounce.
• delivered in julycopper futuresThey were up 9 cents, or 2.4%, at $3.75 a pound.
• delivered in julyPlatinum FuturesIt was up $15.70, or 1.5%, at $1,082.60 an ounce.
• delivered in JunePalladium FuturesIt fell $14.70, or 1%, to settle at $1,484.90 an ounce.