Price action
- Gold futures
GCQ22,
-0.56%GC00,
-0.56%
for August delivery were down $10.70, or 0.6%, to $1,806 .80per ounce. Prices as of Wednesday traded around 1.6% lower for the month and down 0.8% year to date. - Silver futures
SI00,
-1.54%SIU22,
-1.87%
for September delivery dropped 57.3 cents, or 2.8%, to $20.165 per ounce. - October platinum
PLV22,
-1.90%PL00,
-1.90%
tumbled $24.90, or 2.7%, to $885 per ounce. - September palladium
PAU22,
-1.70%PA00,
-1.70%
lost $63.10, or 3.2%, to $1,883.50 an ounce. - Copper futures
HGU22,
-2.01%HG00,
-2.01%
for September delivery dropped 7.9 cents, or 2.1%, to $3.702 per pound.
What analysts are saying
One precious metals analyst said the decline in gold and silver prices this week has been a delayed reaction to the increasing hawkishness from the Federal Reserve and other central banks.
“What we’re seeing here is a little bit of a delayed reaction to the hawkishness that we’ve seen from the U.S. central bank and increasingly other central banks around the world,” said Bart Melek, global head of commodity strategy at TD Securities, during a conversation with MarketWatch.
“Jerome Powell is hanging around with his European counterparts and the discussion du jour is inflation and what to do with it.”
The prospect of higher interest rates has dampened demand for gold because higher rates make bonds a more attractive investment by comparison, since gold doesn’t offer a yield.
Powell said on Wednesday that there is “no guarantee” that the Fed could drive inflation back down to its 2% target without crashing the robust American labor market. The Fed chairman spoke during a panel discussion during the ECB’s summer policy conference in Sintra, Portugal.
Melek added that he expects gold will continue to weaken as algorithmic traders like commodity trading advisors ramp up bets against the yellow metal. The next technical support level for gold is $1,795 per ounce.
Meanwhile, the PCE inflation gauge for May — which is the Fed’s preferred measure of inflationary pressures in the United States — saw core inflation slow slightly to 4.7%, while the headline number remained unchanged at 6.3%. Consumer spending increased by just 0.2% last month, an increase that was smaller than what economists polled by FactSet had anticipated. Meanwhile, weekly jobless claims data showed the number of Americans applying for jobless benefits for the first time decreased last week by 2,000.
Naeem Aslam, chief market analyst at AvaTrade, said he expects gold will remain volatile in the wake of the latest batch of U.S. data, as traders looking to hedge their risk in a highly uncertain environment should help keep the price of gold from “falling off a cliff.”
