Gold hovers near mid-March low as Powell flags more rate hikes

GOLD prices lingered near their lowest in nearly four months on Thursday (Jun 29), as US Federal Reserve chair Jerome Powell kept the door open for more interest rate hikes to bring down inflation.

Spot gold rose 0.25 per cent to US$1,912.19 per ounce by 0123 GMT. On Wednesday, the metal hit its lowest since mid-March at US$1,902.69.

US gold futures fell 0.1 per cent to US$1,920.50.

The dollar index was steady.

Powell suggested another two rate hikes to the Fed funds target rate were likely, and he did not see inflation abating to the 2 per cent target until 2025.

Investors now see an 81 per cent chance of a 25-basis point rate hike in July, according to CME’s Fedwatch tool.

High interest rates discourage investing in non-yielding gold.

Market participants are now awaiting initial US jobless claims and final first-quarter GDP numbers due later in the day, along with personal consumption expenditures (PCE) data for May on Friday.

Analysts polled by Reuters expect the core PCE to be 4.7 per cent on a year-over-year basis, well above the Fed’s 2 per cent target.

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Elsewhere, Japanese retail sales rose 5.7 per cent in May, slightly above the median market forecast for a 5.4 per cent gain, according to government data.

Spot silver rose 0.6 per cent to US$22.86 per ounce while platinum gained 0.7 per cent to US$916.73.

Palladium jumped 1 per cent to US$1,261.66, having fallen to its lowest in 4-1/2 years in the previous session. REUTERS