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Gold eases as dollar firms at start of busy Fed week

June 12, 2023By Reuters

June 12 (Reuters) – Gold prices dipped on Monday as the dollar and bond yields firmed, while traders braced for a busy week of key U.S. inflation prints and major central bank policy meetings, with all eyes on the Federal Reserve.

Spot gold fell 0.4% to USD 1,953.77 per ounce by 1:40 p.m. EDT (1740 GMT). U.S. gold futures settled 0.4% lower at USD 1,969.70.

The dollar index edged up 0.2%, making gold more expensive for overseas buyers, while a rise in U.S. Treasury yields made zero-yielding bullion less attractive.

“Going into this week with gold is almost like a coin flip,” said Bob Haberkorn, senior market strategist at RJO Futures.

The U.S. consumer price index for May is due at 8:30 a.m. EDT on Tuesday, with the producer price index reading due on Wednesday morning ahead of the Fed’s interest rate decision later that day.

“The fact that if we get a halt on rate hikes would push gold up pretty big despite a hawkish (Fed) statement,” Haberkorn said.

Markets priced in a 76% chance of the Fed keeping rates unchanged, and a 71% chance of a hike in July, according to CME’s Fedwatch tool.

The European Central Bank and the Bank of Japan will deliver their rate decisions on Thursday and Friday, respectively.

“Gold is trading on the assumption that U.S. interest rates will stay where they are with any hike likely to send the precious metal crashing down towards USD 1,900 an ounce,” Kinesis Money analyst Rupert Rowling said in a note.

Silver fell 1.3% to USD 23.95 per ounce, while platinum dipped 1.92% to a two-month low at USD 989.67.

Palladium, used in emissions-controlling devices in cars, gained 1.4% to USD 1,342.27, after hitting its lowest since May 2019 on Friday.

“Palladium could head back above USD 1,500 in the fourth quarter of this year owing to improving automotive production, however, this is currently under pressure from destocking by the automakers,” said Metals Focus analyst Jacob Smith.

(Reporting by Deep Vakil and Seher Dareen in Bengaluru; Editing by Conor Humphries and Shailesh Kuber)


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