Gold futures experienced a downturn on Wednesday (May 24) as the relentless strength of the dollar continued to weigh on the market. Meanwhile, investors closely monitored the release of key economic indicators, including the first quarter 2023 gross domestic product (GDP) and the US personal consumption expenditure (PCE) price index, which could provide insights into the Federal Reserve’s (Fed) interest rate trajectory.
The gold futures witnessed a decline of $9.90, or 0.50%, settling at $1,964.60 per ounce. Similarly, silver futures recorded a drop of 38.40 cents, or 1.63%, reaching $23.24 per ounce. Platinum futures experienced a notable decrease of $28.10, or 2.66%, concluding at $1,029.50 per ounce. Palladium futures also declined, with a decrease of $48.60, or 3.4%, to reach $1,398.10 per ounce.
Gold futures faced their third consecutive day of losses as the strength of the dollar made the gold contract, which is priced in dollars, more expensive and less appealing to investors holding other currencies. The dollar index, which measures the performance of the dollar against six major currencies, rose by 0.28% to 103.4864.
Edward Moya, an analyst at OANDA, noted that while some investors turned to gold as a safe haven amid stagnant US debt ceiling negotiations, the persistent strength of the dollar led to fluctuations in gold prices throughout the day, ultimately closing the market in negative territory. The dollar continued its ascent after several Fed officials expressed support for further interest rate hikes as a measure to combat inflation.
Market participants are eagerly awaiting the release of the US GDP figures for the first quarter of 2023 today, as well as the upcoming Personal Consumption Expenditure (PCE) Price Index for April. These indicators hold significance in detecting changes in consumer behavior and provide a broader perspective on the prices of goods and services compared to the Consumer Price Index (CPI) data.
As the market continues to grapple with the impact of the strong dollar and awaits crucial economic data, investors remain cautious and vigilant in assessing the future direction of gold and its potential as a hedge against inflation and market volatility.
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Thursday, May 25, 2023