Gold dips after US Fed chief pledged to keep up inflation fight

BENGALURU (June 23): Gold prices eased on Thursday (June 23), pressured by expectations of aggressive interest rate increases after the US Federal Reserve (Fed) chief doubled down on the central bank’s fight against inflation.

Spot gold had fallen 0.2% to US$1,834.33 (about RM8,084.81) per ounce by 0733 GMT. US gold futures eased 0.1% to US$1,835.60.

“With [Fed chair Jerome] Powell pointing out overnight that 1% rises were a real possibility, it’s a reminder of that constant pressure on gold prices from rising interest rates,” said Michael McCarthy, the chief strategy officer of Tiger Brokers in Australia.

When asked by a member of the Senate Banking Committee if the Fed could raise rates by as much as 100 basis points at once, Powell said he would never take anything off the table, and officials would make whatever moves as needed to restore price stability.

Gold is often viewed as a hedge against inflation and a safe haven during economic crises, like a recession, but saw some gains after Powell’s statement as Treasury yields bore the brunt of it.

Higher interest rates and bond yields raise the opportunity cost of holding bullion, which yields no interest.

Powell is due to testify again in Washington, DC later on Thursday.

“Gold is expected to follow the commodity complex down. It is more likely for gold to trade below US$1,800/oz in the next two weeks than not,” said Michael Langford, a director at corporate advisory AirGuide.

“Gold is crypto for boomers. It has no meaningful industrial usage and is a psychological store of value much in the same way crypto was for the younger generation.”

The dollar firmed at elevated levels after some losses in the previous session, hurting demand for greenback-priced bullion among buyers holding other currencies.

Spot silver dropped 0.5% to US$21.28 per ounce, platinum fell 0.2% to US$924.22 and palladium rose 0.6% to US$1,874.23.