© Reuters.
Investing.com – Updated at 13:58 GMT
Gold prices are falling to $1904 an ounce, which is a support level.
The decline comes after comments from Fed Chairman Jerome Powell, who stated that the Fed will keep monetary policy tight for a longer period.
Powell also hinted to raise interest rates twice or more according to the expectations of the members of the Open Market Committee.
Powell talks about the continuation of surprisingly high inflation despite the 500 basis point rate hike.
Follow the full statements and statements of the heads of major central banks:
The decline comes due to the loss of gold’s attractiveness in light of the high interest rate on the US dollar index, which now records 102.515, up by 0.38%.
Gold prices moved lower on Wednesday, hovering near three-month lows as the anticipation of Federal Reserve Chairman Jerome Powell’s speech, as well as a reading of the central bank’s preferred inflation measure kept traders on their toes.
Meanwhile, copper prices fell further as Chinese data indicated deteriorating economic conditions in the world’s largest copper importer.
It fell to $1,907 an ounce, while it fell to $1,916 at 11:53 GMT.
Zed landing?
Gold’s appeal is fading as risk appetite improves ahead of Powell’s speech
The attractiveness of bullion as a safe-haven asset declined amid some improvement in risk appetite, after positive economic indicators from the United States, which showed some resilience in the capital goods and housing market.
This weighed on the yellow metal ahead of the European Central Bank Forum later on Wednesday, where the Fed chief is widely expected to provide more signals on monetary policy.
Powell largely stuck to his hawkish stance during his two-day testimony before Congress last week, announcing at least two more rate hikes this year to curb soaring inflation.
More clues about inflation in the US are also set for this week, which is due to be released on Friday in May. The index is the Fed’s preferred measure of inflation, and is expected to hold steady after an unexpected rally in April.
The Fed’s hawkish view bodes further decline for gold, given that it raises the opportunity cost of holding the yellow metal. This notion has weighed heavily on gold so far in 2023, where it has largely outperformed the yellow metal.
Markets are pricing in the Fed raising interest rates by 25 basis points in July, and another hike of the same size later in the year.
Other precious metals also took heavy losses, dropping 0.7%, while hovering near a one-month low.
Copper fell on weak Chinese data
Among the industrial metals, copper prices fell the most on Wednesday as data showed that the world’s largest copper importer fell further during the month of May.
It fell 0.4% to $3.7767 a pound.
Weak industrial earnings data points to more headwinds for China’s manufacturing sector, a major driver of copper demand.
The focus this week is also on data from China, which is set to shed more light on slowing business activity in the country.
2023-06-28 11:57:00
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