Gold Prices Rebound Slightly, Recovering from Three-Month Lows

Published on Jun 23, 2023 14:18

Gold futures showed a recovery during mid-Asia electronic trades today, bouncing back from their lowest level since March 16th. However, the metal is expected to witness its largest weekly decline since February due to the market`s anticipation of upcoming interest rate hikes by the US Federal Reserve.

The announcement by Federal Reserve Chair Jerome Powell regarding the planned rate increases later in the year further intensified selling pressure on gold. As a result, the precious metal reached its lowest point in three months, with prices dropping to $1922 yesterday and $1919.50 today.

A break below the $1919 level could potentially lead to further losses in the coming week. Currently, the COMEX gold front month contract is trading at $1928 per ounce, reflecting a gain of $4.70. Similarly, MCX August delivery gold futures are trading higher at Rs 58,317 per 10 grams, with an increase of Rs 121. The counter has rebounded from its recent low of Rs 58,096 recorded earlier today.

During Powell`s testimony, he emphasized the Federal Reserve`s cautious approach towards adjusting interest rates as they approach the conclusion of their significant monetary policy tightening. Fed Governor Michelle Bowman echoed the sentiment, highlighting the necessity for additional policy rate increases to manage inflation. Additionally, US jobless claims remain elevated, potentially indicating a weakening labor market amidst the Federal Reserve`s ongoing rate hikes.

On the data front from US next week, we have final GDP, unemployment claims, consumer confidence and core price index.