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Gold stabilizes after strong US data drags bullion below USD 1,900/oz

June 29, 2023By Reuters

June 29 (Reuters) – Gold regained some ground on Thursday as traders took advantage of a brief dip below the key psychological USD 1,900 level that was driven by a volley of robust US economic readings.

Spot gold edged up 0.1% at USD 1,908.4 per ounce by 1:52 p.m. EDT (1752 GMT). US gold futures settled 0.2% lower at USD 1,917.90.

Prices fell under USD 1,900 for the first time since mid-March after the data as the dollar index firmed 0.4%, making bullion less attractive for overseas buyers. Benchmark 10-year Treasury yields rose.

“We’ve seen prices move down from USD 2,000 to USD 1,900 and that in itself is going to bring about some bargain hunting,” said David Meger, director of metals trading at High Ridge Futures.

US jobless claims fell last week by the most in 20 months, pointing to labor market strength that also helped prop up gross domestic product in the first quarter.

“It was a one-two punch taking gold another leg lower … and then the hawkish central banks haven’t helped out at all,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

Federal Reserve Chair Jerome Powell said most of the central bank’s policymakers expect they would need to raise interest rates at least twice more by year-end with US inflation well above the 2% goal and a labor market that’s still very tight.

While gold is considered an inflation hedge, rising rates dull non-yielding bullion’s appeal, with current rate expectations putting it on course to end the quarter in negative territory for the first time since September 2022.

Traders awaited May’s personal consumption expenditure data, the Fed’s favored inflation gauge, on Friday.

Silver fell 0.6% to USD 22.59 per ounce, while platinum dropped 1.6% to USD 896.55, an eight-month low.

Palladium dipped 1.6% to USD 1,228.50, hovering near its lowest since December 2018.

(Reporting by Deep Vakil in Bengaluru; Editing by Conor Humphries, Shilpi Majumdar and Maju Samuel)


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