Gold Loses Shine as Dollar Gains Strength

27 Jun 2024 , 09:21 AM

Gold prices maintained stable on Thursday after sliding to a two-week low the previous session, as the dollar and Treasury yields remained robust ahead of a key inflation report later this week.

Spot gold remained constant at $2,298.88 per ounce. Bullion fell to its lowest level since June 10 on Wednesday. Gold futures fell 0.2% to $2,309.60.

The dollar remained at a two-month high, making gold more expensive for other currency holders, as benchmark 10-year yields moved higher.

This week, traders are looking forward to the U.S. first-quarter GDP estimates on Thursday and the personal consumption expenditures (PCE) price index report on Friday for fresh clues on the timing and magnitude of potential rate reduction this year.

Sales of new single-family houses in the United States fell to a six-month low in May, as rising mortgage rates weighed on demand, adding to signals that the housing industry recovery was faltering.

On Wednesday, U.S. Federal Reserve Governor Michelle Bowman repeated her basic opinion that “inflation will decline further with the policy rate held steady,” and that rate reduction will “eventually” be justified if inflation moves sustainably towards 2%.

Federal Reserve Governor Lisa Cook said on Tuesday that if the economy performs as expected, the Fed will decrease interest rates, but she declined to predict when.

Lower interest rates diminish the potential cost of storing non-yielding bullion.

Spot gold may continue to decline in the $2,275-$2,286 per ounce band as it follows a consistent downward trend.

Meanwhile, if inflation decreases as projected, the European Central Bank may gradually reduce interest rates, according to two ECB policymakers on Wednesday.

Spot silver rose 0.1% to $28.78 per ounce, platinum increased 0.1% to $1,011.65, and palladium fell 0.6% to $922.94.

For feedback and suggestions, write to us at [e-mail]