Gold is trading near the lowest since April after the US Federal Reserve pulled forward its forecasts for interest rate hikes. A stronger US dollar has added much of the pressure, with the currency on course for its best month since March last year, and investors have trimmed holdings in bullion-backed exchange-traded funds.
Traders are focusing on economic data and comments from Fed officials for more clues on the timing of stimulus tapering.
Richmond Fed President Thomas Barkin said on Tuesday that he wants to see much more US labor market progress before taking action, while Fed Governor Christopher Waller said economic performance warrants thinking about pulling back on some stimulus.
Photo: Bloomberg
“Looming asset purchase tapering putting upward pressure on real rates and the US dollar brings downside risk for gold” through the second half of the year, Morgan Stanley wrote in a note.
The bank now forecasts gold to drop just below US$1,700 an ounce in the next six months, while also flagging the possibility of a sharp downturn through 2022.
Spot gold rose 0.3 percent on Friday to US$1,783.02 an ounce. Gold for August delivery rose US$6.50 to US$1,783.30 an ounce, up 0.31 percent from a week earlier.
Investors are also weighing the fallout from the more contagious Delta variant of SARS-CoV-2, and broader economic data. Euro-area economic confidence has climbed to the highest level in more than two decades, and US consumers are more upbeat than at any point since the COVID-19 pandemic began.
“Precious metal markets simply can’t find a gear with the stronger dollar and strong economic data weighing on the market,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S. “Gold once again has its back against the wall. However, judging from previous lows, that is what gold needs in order to stabilize, reverse and eventually squeeze the shorts back out of the market,” Hansen said.
Other commodities:
‧ Silver for September delivery rose US$0.40 to US$26.50 an ounce, up 1.57 percent from a week earlier, and September copper rose US$0.04 to US$4.28 a pound, posting a weekly decline of 0.23 percent.
Additional reporting by AP
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