Gold prices fell on Tuesday after finishing Monday’s session at their lowest level in a week, but the yellow metal is managing to hang on to most of its July gains ahead of Wednesday’s Federal Reserve interest rate decision and ECB and Bank of Japan meetings this week.
Price action
-
Gold for August delivery
GC00,
+0.09% GCQ23,
+0.09%
declined by $1, or nearly 0.1%, at $1,961.20 an ounce on Comex. -
Silver futures for September delivery
SI00,
+1.05% SIU23,
+1.05%
gained 29.9 cents, or 1.2%, at $24.88 an ounce after losing 1.1% on Monday. -
October platinum
PLV23,
+0.78%
rose by $2.70, or 0.3%, to $972.20 per ounce, while palladium for September
PAU23,
+1.32%
gained $6.20, or 0.5%, to $1,275 per ounce. -
September copper
HGU23,
+1.62%
added 8 cents, or 2.1%, to $3.9355 per pound.
Price action
“This could be an explosively volatile week for gold due to the Federal Reserve rate decision and incoming key U.S. economic data,” said Lukman Otunuga, manager, market analysis at FXTM. Bulls are “already lurking in the vicinity,” with prices pressing above the sticky $1,960.
Whatever the outcome of the Fed decision, “it is likely to rock zero-yielding gold on Wednesday,” he said in market commentary.
Comments from Fed Chairman Jerome Powell on Wednesday in a press release following the Fed rate decision may offer some insight about the central bank’s plans for further interest rate hikes.
Although the Fed left rates on hold in June after delivering 10 consecutive interest-rate hikes, the central bank is widely expected to raise rates by another 25 basis points at this meeting.
Any sign that the central bank is planning further hikes beyond July — perhaps another move at its September meeting, or later — could weigh on gold prices, which have benefited from the latest batch of inflation data showing price pressures easing more quickly than expected.
“The downside risk to gold as we wrap up July will be whether the Fed leaves the door somewhat open for further increases to US interest rates,” Jameel Ahmad, chief analyst at Dubai-based brokerage GTC, said in emailed comments to MarketWatch.
Key U.S. economic data this week include a reading on second quarter gross domestic product on Thursday.
On Tuesday, a survey of U.S. consumer confidence climbed to a two-year high of 117.0 in July.
It would be “wise to keep a close eye” on the key U.S. Q2 GDP, initial jobless claims, durable goods and June PCE data in the second half of the week, said Otunuga. “When factoring in how these key releases may impact Fed hike expectations beyond July’s policy meeting, this could translate to heightened volatility for gold.”
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