Title: Gold Down Amid Big Interest Rate Hike Expectations

Jun 24, 2022 12:05AM ET

By: AnalysisWatch

On Friday morning in Asia, gold fell for the second time in a row as concerns about a big interest rate hike by the US Federal Reserve weighed on gold demand.

As of 12:01 p.m. EDT, gold futures were down 0.21 percent to $1,825.95.

On Thursday, Fed Chairman Jerome Powell affirmed that the central bank's fight against inflation is "unconditional," and Fed Governor Michelle Bowman said she supports another 75 basis point rate hike in July, followed by several more half-point increases.

Yields on 10-year U.S. Treasuries strengthened on Friday, reducing demand for gold.

The U.S. dollar remains stable, and expectations now lean toward a 75 basis point rate hike by the Fed in July.

The TIPS spread a market gauge of inflation expectations is also near a 4-month low, and this is holding back a possible gold rally.

Gold looks vulnerable in the short term given its inability to break $1,850, its 200-day average, this week, adding, if it weren't for the fear of a global recession, then gold would probably be lower than it is now.

The SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.81 percent to 1,063.07 tons on Thursday from 1,071.77 tons a day earlier.

Silver fell 0.24 percent among other precious metals. Platinum jumped 1.00% and palladium rose 1.53%.