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.
Spot gold fell to $1,907 an ounce, while gold futures 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 Powell’s speech at 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, with the PCE price index for May due to be released on Friday. 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, with the dollar largely outperforming the yellow metal.
Markets are pricing in more than a 75% chance that the Fed will raise interest rates by 25 basis points in July, and another hike of the same size later in the year.
Other precious metals also suffered heavy losses, with platinum down 0.7%, while silver hovering near a one-month low.
Copper fell on weak Chinese data
Among the industrial metals, copper prices fell further on Wednesday as data showed that industrial profits in the world’s largest copper importer fell further during the month of May.
Copper futures 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 the PPI data from China, which is set to shed more light on slowing business activity in the country.
2023-06-28 12:38:43
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