Gold prices revised, today, Wednesday, as they are trading in a narrow range in conjunction with the rise in the dollar index, and this comes in light of the markets’ anticipation of the next interest rate decision of the US Federal Reserve.
Meanwhile, the gold market received another negative piece of news, as exports from top bullion consumer China contracted much faster than expected in May, and imports also declined. Where the dollar index interacted with the data and turned higher after it was slightly lower, which pushed gold to decline after it was stable.
Gold and the dollar now
Gold futures fell 0.3% to $1,975 an ounce.
While spot contracts fell by 0.2% to 1959 dollars an ounce.
On the other hand, the dollar index rose by 0.13% to 104,210 points.
gold when settling yesterday
Gold prices rose at the end of trading, yesterday, Tuesday, for the second session in a row, despite the rise in the dollar and Treasury bond yields.
Gold futures contracts for August delivery increased by 0.4%, or $7.2, to $1981.5 an ounce.
The rise of the precious metal comes in light of the divergence in the performance of the US stock indices during the middle of trading on Tuesday, and in conjunction with the rise in US Treasury bond yields.
Gold may witness upward movements
The upside in gold is intact and the big question now is when the Fed will end its rate hike campaign, said Ilya Spivak, head of global macroeconomics at Tastylive, adding that gold could see moves higher once there is more clarity on that.
Non-interest-bearing bullion tends to become less attractive in a higher interest rate environment.
Ahead of next week's Fed meeting, the US Consumer Prices report for May, due on June 13, will provide investors with more clarity on the health of the world's largest economy after recent mixed economic data and dovish statements from Fed officials.
Fed fund futures indicate that traders have priced in an 80.6% chance that the Fed will hold interest rates in the 5%-5.25% range, according to the Fed's interest-tracking tool on the Investing Saudi website. However, they see 51% odds of another 25 basis point increase in July.
Investors are assessing the possible outcomes of the Federal Reserve meeting scheduled for next week, during which expectations indicate that interest rates will be fixed, but markets are awaiting signals from officials about the future of monetary policy.
Negative data for gold
Meanwhile, exports from top bullion consumer China contracted much faster than expected in May and imports declined, albeit at a slower pace, as manufacturers struggled to find demand abroad while domestic consumption remained sluggish.
Exports from the world's second-largest economy fell 7.5 percent year-on-year in May, the sharpest drop since January, after growing 8.5 percent in April. Imports contracted at a slower pace, falling 4.5 percent last month.
