Gold Prices Rise as Dollar Weakens
Gold prices rose on Monday as a weaker dollar made bullion more attractive to overseas investors. However, prices remained close to three-month lows as traders assessed the prospects of more interest rate hikes by the US Federal Reserve. Spot gold rose 0.3 percent to $1,926.19 per ounce by 8:38 a.m. Saudi time, while US gold futures gained 0.3 percent to $1,936.00. Bullion slumped nearly 2 percent in the previous week as hawkish comments from Fed officials signaled more rate hikes to tame sticky inflation. Higher interest rates make non-yielding gold less appealing.
Gold Prices Depressed Due to Tightening Cycle
“We are near the end of tightening cycle, but still not quite at the end as there is still the risk of it being extended, hence the depressed price action,” said OCBC FX strategist Christopher Wong. Investors now expect a 72 percent chance of a rate hike in July, with rate cuts seen from 2024 onwards, per CME’s Fedwatch tool. The dollar index edged 0.2 percent lower. Yet the lower trend in gold was “in part offset by strong physical consumption from central banks and China and some recession tail hedging,” Citi analysts said in a note.
Speculators Raised Their Net Long Position in COMEX Gold
Speculators raised their net long position in COMEX gold by 1,322 contracts to 94,626 in the week ended June 20, CFTC data showed on Friday. Oil prices were slightly higher as weekend troubles in Russia raised questions about crude supply but left investors hesitant to draw any further conclusions. “The Wagner fallout with Russia certainly added impetus to the gold market in early Asia. With that situation de-escalating quickly, gold is holding up just the same,” said Clifford Bennett, chief economist at ACY Securities.
Spot Silver and Platinum Prices Rise
Spot silver jumped 1.5 percent to $22.75 per ounce, while platinum gained 1.3 percent to $928.74. Auto-catalyst material palladium rose 0.8 percent to $1,294.59. “We expect the downtrend to continue (in palladium) … but also note the increasing short squeeze risk in the event of any supply disruption or demand surprise to the upside,” Citi analysts added.
Heading 1: Gold Prices Rise on Weaker Dollar
Heading 2: Traders Assess Prospects of More Interest Rate Hikes
Heading 3: Speculators Raised Their Net Long Position in COMEX Gold
Heading 4: Spot Silver and Platinum Prices Rise
Heading 5: Auto-Catalyst Material Palladium Rises
Gold prices rose on Monday as a weaker dollar made bullion more attractive to overseas investors. However, prices remained close to three-month lows as traders assessed the prospects of more interest rate hikes by the US Federal Reserve. Higher interest rates make non-yielding gold less appealing.
“We are near the end of tightening cycle, but still not quite at the end as there is still the risk of it being extended, hence the depressed price action,” said OCBC FX strategist Christopher Wong. Investors now expect a 72 percent chance of a rate hike in July, with rate cuts seen from 2024 onwards, per CME’s Fedwatch tool.
Speculators raised their net long position in COMEX gold by 1,322 contracts to 94,626 in the week ended June 20, CFTC data showed on Friday. The lower trend in gold was “in part offset by strong physical consumption from central banks and China and some recession tail hedging,” Citi analysts said in a note.
Spot silver jumped 1.5 percent to $22.75 per ounce, while platinum gained 1.3 percent to $928.74. Auto-catalyst material palladium rose 0.8 percent to $1,294.59.
“We expect the downtrend to continue (in palladium) … but also note the increasing short squeeze risk in the event of any supply disruption or demand surprise to the upside,” Citi analysts added.
Oil prices were slightly higher as weekend troubles in Russia raised questions about crude supply but left investors hesitant to draw any further conclusions. “The Wagner fallout with Russia certainly added impetus to the gold market in early Asia. With that situation de-escalating quickly, gold is holding up just the same,” said Clifford Bennett, chief economist at ACY Securities.
In conclusion, gold prices rose on Monday due to a weaker dollar, but remained close to three-month lows as traders assessed the prospects of more interest rate hikes by the US Federal Reserve. Speculators raised their net long position in COMEX gold, while spot silver and platinum prices rose. Auto-catalyst material palladium also rose, but analysts expect the downtrend to continue with increasing short squeeze risk in the event of any supply disruption or demand surprise to the upside.