Gold futures drop $1.80 as bond yield surges

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gold futures price It closed Tuesday (June 21) down $1.80, pressured by a rebound in US Treasury yields.

Comex gold contract Delivered in Aug. It was down $1.80 to close at $1,838.80 an ounce.

The rebound in US Treasury yields will increase the opportunity cost of holding gold. Because gold is an asset that does not return in the form of interest.

Gold prices were also affected by concerns about the Federal Reserve’s accelerating interest rate hikes.
Investors will keep an eye on Fed Chairman Jerome Powell’s statement this week.

Powell will deliver a semi-annual statement on monetary policy and US economic conditions to Congress. It is due to make a statement before the Senate Banking Committee on Wednesday, June 22, before addressing the House Financial Services Committee on Thursday, June 23.

Before giving such a statement The Fed filed its semi-annual monetary policy report to Congress last week. The Fed signaled that it would not let anything hinder its efforts to combat inflation.

“The Monetary Policy Committee (FOMC) is committed ‘Unconditional’ in price stabilization This is necessary to maintain a strong labor market,” the Fed said in its report.

The use of the word “unconditional” in the report This indicates that the Fed is ready to take on the risks that may arise. so that the economy can avoid a worse situation from uncontrollable inflation that will damage the economy in the long run.

The FOMC raised the short-term interest rate by 0.75% to 1.50-1.75 percent at its meeting last week. This was the biggest interest rate hike in 28 years, or since 1994.

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In addition to its policy interest rate forecast (Dot Plot), Fed officials forecast interest rates to hit 3.4% by the end of the year. This indicates that the Fed will raise interest rates another 1.75% this year and it expects interest rates to rise to 3.8 percent by the end of 2023 and slow to 3.4 percent in 2024 while long-term interest rates remain. at 2.5%

With the Fed signaling a rate hike of 1.75% later this year, analysts are expecting a 0.75% rate hike in July and 0.50% in September, before only raising it to 0.5% in July. 0.25% in November and December

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