Gold falls to two-week low against the dollar

Attention will now focus on the U.S. Personal Consumption Expenditures (PCE) Price Index.

Gold prices fell 1% to their lowest level in more than two weeks on Wednesday, pressured by a stronger dollar and higher bond yields, as traders await U.S. inflation data to be released later this week.

Spot gold fell 0.8% to $2,301.16 per ounce, reaching its lowest level since June 10. U.S. gold futures also closed down 0.8% at $2,313.2 per ounce.

At this point, the market is likely responding to the strength of the dollar, and we continue to monitor the possibility that the Federal Reserve may not move (interest rates) anytime soon.

The dollar rose 0.4% to a nearly two-month high against its rivals, making gold more expensive for holders of other currencies, while benchmark 10-year U.S. Treasury yields reached their highest level in nearly two weeks.

XAU/USD

Attention this week will focus on the U.S. Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred inflation gauge, which could shed light on the central bank’s interest rate path.

Also on the radar are the U.S. Gross Domestic Product estimates for the first quarter and a crucial debate between President Joe Biden and his Republican rival Donald Trump on Thursday.

Fed Governor Michelle Bowman reiterated on Tuesday her view that keeping the policy rate stable “for some time” will likely be enough to control inflation, but also repeated her readiness to raise borrowing costs if necessary.

Higher rates increase the opportunity cost of holding non-yielding bullion.

In other precious metals, spot silver slipped 0.1% to $28.88 per ounce; palladium fell 2% to $929.25 per ounce; and platinum gained 3.1% to $1,011.88 per ounce.

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ABOUT THE AUTHOR See More
Ignacio Teson
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
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