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Gold slips as US dollar, yields rise after Fed minutes

July 5, 2023By Reuters

July 5 (Reuters) – Gold prices fell on Wednesday, weighed down by an uptick in the dollar and US Treasury yields after minutes from the Federal Reserve’s June policy meeting cemented expectations that rates will stay higher for longer.

Spot gold was down 0.5% at USD 1,916.49 per ounce by 02:32 p.m. EDT (1832 GMT). US gold futures settled 0.1% lower at USD 1,927.10.

“Gold slumps to day’s lows after Fed minutes showed that the ‘pause’ in June was simply the path of least dissent and almost the entire committee expected ultimately higher rates,” said Tai Wong, a New York-based independent metals trader.

“The upcoming JOLTS report and payrolls data will have a much greater impact, especially if they are weaker than expected.”

A united Fed agreed to hold interest rates steady at the June meeting, according to meeting minutes released on Wednesday, even as the vast bulk expected they would eventually need to tighten policy further.

Benchmark US 10-year Treasury yields jumped to a near four-month peak after the release, while the dollar rose 0.3% against its rivals.

Traders are pricing in an 89% chance of a 25-basis-point hike from the Fed in the July meeting after last month’s pause, per CME’s Fedwatch tool.

Gold is highly sensitive to rising US interest rates, as they increase the opportunity cost of holding non-yielding bullion.

Investors’ focus now shifts to the US Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS, and ADP, jobless claims on Thursday before Friday’s non-farm payrolls report.

Traders also kept a close watch on updates about China’s export controls on semiconductor metals as it ramps up a tech fight with the United States ahead of US Treasury Secretary Janet Yellen Beijing visit.

Spot silver rose 0.8% to USD 23.12 per ounce, platinum eased 0.1% to USD 914.11 while palladium climbed 1% to USD 1,255.78.

(Reporting by Brijesh Patel in Bengaluru; Editing by Christina Fincher and Shailesh Kuber)


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