Gold prices rose as a pullback in the dollar lifted its demand
The yellow metal prices rose on Tuesday in Asia, as a pullback in the dollar raised the demand for gold. The U.S. dollar dropped below the $92 mark. Investors digested comments by U.S. Federal Reserve chair Jerome Powell that the inflation will be short-lived. The market is awaiting Powell’s testimony to Congress later in the day.
Gold futures increased by 0.1% and traded at $1,783.90 per ounce. Meanwhile, spot gold gained 0.1% at $1,784.83 per ounce.
The U.S. dollar index retreated from a two-month peak against its rivals. Notably, that made gold more affordable for holders of other currencies.
The benchmark 10-year yield held below 1.50%, reducing the opportunity cost of holding non-interest-bearing gold.
According to Powell, Inflation had picked up but should move back toward the Fed’s 2% target once supply imbalances resolve. Investors now await the hearing to get hints on the pace of U.S. economic recovery from coronavirus. Meanwhile, the market is waiting for the outlook for the Federal Reserve monetary policy.
Some investors view the yellow metal as a hedge against higher inflation that could follow stimulus measures.
Gold witnessed the biggest weekly decline in 15 months after the Fed announcement
The precious metal boosted on Monday after the biggest weekly decline in its worst week in 15 months. It came as the Federal Reserve revealed earlier-than-expect interest rate hikes and tightening of its asset purchase program as it handed down its latest policy decision during the previous week. Gold recovered a little as investors bet the tightening will be very gradual.
According to data from the U.S. Commodity Futures Trading Commission, speculators reduced their net long positions in COMEX gold in the week ended June 15 and raised their net long positions in silver.
Jeffrey Halley, a senior market analyst at OANDA, announced that gold rose overnight as the U.S. dollar retreated. He added that (upbeat) sentiment continues in Asia this morning, as regional investors hurry to New York’s overnight lead.
Still, some investors remained cautious.
Avtar Sandu, a senior commodities manager at Phillip Futures, announced that despite the recovery, gold prices were being traded mostly within last Friday’s chart pattern, which is more reflective of a pause and indecision.
SPDR Gold Trust, the world’s biggest gold-backed exchange-traded fund, announced its holdings slipped 0.3% to 1,049.56 tonnes on June 22.
Silver declined by 0.2% and settled at $25.88 per ounce. Meanwhile, palladium dropped 0.1% to $2,581.99 and platinum surged 0.3% to $1,056.39.
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