Gold in the shadow of the Fed interrupted its upward trend

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Gold returned to negative territory after five consecutive uptrends, under pressure from the recovery of the dollar in view of the publication of the minutes of the May meeting of the Fed.

In particular, the June gold contract closed at $ 1,846.3 an ounce, down about 1% or $ 19.1.

The dollar, which is used to competing for gold, as rising value makes the precious metal more expensive for holders of other exchange rates, strengthened today by 0.4%, recovering from the low month where it was yesterday.

As OANDA senior analyst Edward Moya points out, “the market is focused on the Fed on its way to raising interest rates … a careful tone, that would mean good news for the metal. ”

The US Federal Reserve will publish the minutes of the meeting that took place on May 3-4, shortly after the closing of the trading of the gold contracts.

Investors expect the bank to raise interest rates by 50 basis points in both June and July. After all, Fed Chairman Jerome Powell has promised to raise interest rates as high as needed until there is evidence that inflation is falling.

Although gold is considered to hedge against inflation, interest rate hikes limit its attractiveness as it tends to increase bond yields, which compete with the precious metal by offering a steady return on investment.

For his part, Atlanta Fed Chairman Rafael Bostic warned yesterday that excessive interest rate hikes could cause a “significant economic diversion”.

In other metals, silver also fell 1%, closing at $ 21.87 an ounce.

Platinum lost 1.3% to $ 929 an ounce, palladium rose marginally by 0.1% to $ 1,989.3 an ounce and copper fell 1.1% to $ 4.25 a pound.


Source: Capital

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