“Gold Prices Under Pressure from US Federal Reserve: Important Levels to Watch”

by Ambar Warrick

Investing.com – Gold prices rose slightly after Monday’s recent losses, and remained under pressure as fears of an imminent interest rate hike by the Federal Reserve dampened appetite for the yellow metal, as did the recent rally in yields.

Bullion prices (spot gold) posted losses for two consecutive weeks as upbeat comments from Fed officials and some stronger-than-expected economic data escalated fears that the Fed will continue to raise interest rates this year.

Such a scenario portends more downward pressure on gold, since higher lending rates raise the opportunity cost of holding bullion, which offers no returns.

It was stable at $1,983.94 an ounce, while it rose 0.2% to $1,993.95 an ounce by 00:48 GMT. Both tools lost more than 1% in the previous week.

Gold’s two-week decline comes shortly after the yellow metal rose to near-record levels, largely driven by increased safe-haven demand as markets fear a potential banking crisis and recession this year.

Recession fears, especially with higher US interest rates, are expected to provide more support for the yellow metal, given its safe-haven status.

It says frl that markets are pricing in an almost 90% chance that the Fed will raise interest rates by 25 basis points when it meets next week. While the central bank is then expected to signal a pause in June, markets are identifying a small but growing possibility of another 25 basis point hike in June.

Several Fed speakers have recently indicated that interest rates will rise further, given that US inflation continues to trend well above the central bank’s target range. Decisions to raise interest rates are also due from other major central banks, including the .

Any tightening in global monetary conditions heralds more pressure on gold.

Other precious metals were mixed Monday, down 0.8%, while futures by 0.3%.

Among the industrial metals, copper futures fell slightly, extending last week’s sharp losses as fears of a slowdown in industrial activity hit hard. It fell 0.1% to 3.9888 a pound.

Growing uncertainty about the economic recovery in China, the world’s largest copper importer, also hurt the red metal’s appeal.