Gold prices edged lower on Wednesday as traders weighed Federal Reserve Chairman Jerome Powell’s latest remarks after the central bank held its policy interest rate steady last week but signaled there may be two more rate rises this year to lower U.S. inflation further.
Price action
-
Gold futures for August delivery
GC00,
-1.08% GCQ23,
-1.08%
were off by $2.80, or 0.1%, to settle at $1,944.90 per ounce on Comex. -
Silver futures for July delivery
SI00,
-2.32% SIN23,
-2.32%
were down 42 cents, or 1.8%, to end at $22.81 per ounce. -
Palladium futures for September delivery
PAU23,
-4.93%
were off by $34.80, or 2.5%, to finish at $1,344.30 per ounce, while platinum futures for July
PLN23,
-2.57%
shed $19, or nearly 2%, to settle at $949 per ounce. -
July copper
HGN23,
-0.60%
gained 3 cents, or 0.8%, ending at $3.91 per pound.
Market drivers
Federal Reserve Chairman Jerome Powell on Wednesday affirmed that more interest-rate increases are likely as inflation is still “well above” the 2% target, while acknowledging there is strong support among his central bank’s colleagues for two additional 25-basis-point rate hikes this year.
See: Powell tells Congress to expect higher interest rates
Last Wednesday, Fed officials held the benchmark interest-rate target steady at between 5% and 5.25%, and indicated more hikes might be appropriate this year.
Fed funds futures traders are now pricing in a 78% chance of a 25-basis point Fed rate hike in July, with no rate cuts seen by the end of this year. Traders also see a slightly higher chance of another quarter-of-a-percentage-point rate hike by the Fed in September, according to the CME’s Fedwatch tool.
Treasury yields rose on Wednesday as Powell maintained his hawkish tone, with the benchmark 10-year Treasury yields
TMUBMUSD10Y,
up 3.731% from 3.726% Tuesday afternoon.
The ICE U.S. Dollar index
DXY,
traded 0.4% lower, at 102.14 Wednesday afternoon.
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