Gold Futures Settle Lower As Dollar Climbs Up
Gold prices edged lower on Wednesday as the dollar climbed up amid rising inflation and concerns about the risk of recession pushed up the safe-haven demand for the currency.
Comments from Fed officials affirming further sharp interest rate hikes to bring down high inflation also boosted the dollar.
San Francisco Fed President Mary Daly said on Tuesday that the U.S. annual economic growth is expected to slow below 2 percent amid monetary policy tightening by the central bank.
At a policy panel shared with ECB and BoE leaders today, Fed Chair Jerome Powell reiterated the FOMC’s commitment to bring down inflation. He added that while the Fed is not targeting the foreign exchange rate, dollar strength is disinflationary at the margins.
The dollar index surged to 105.08, gaining about 0.55%, after staying somewhat sluggish during the Asian and European sessions.
Gold futures for August ended lower by $3.70 or about 0.2% at $1,817.50 an ounce.
Silver futures for September ended down by $0.134 at $20.738 an ounce, while Copper futures for September settled at $3.7805 per pound, up $0.0005 from the previous close.
In U.S. economic news, revised data released by the Commerce Department showed U.S. economic activity shrank by slightly more than previously estimated in the first quarter of 2022.
The report showed the decrease in real gross domestic product in the first quarter was revised to 1.6% from the previously reported 1.5%. Economists had expected the drop in GDP to be unrevised.
The slightly bigger than previously estimated decline in GDP in the first quarter came on the heels of the 6.9% spike in GDP in the fourth quarter of 2021.
A report released by Conference Board on Tuesday had showed Consumer confidence in the U.S. continued to deteriorate in the month of June.
The Conference Board said its consumer confidence index slid to 98.7 in June from a downwardly revised 103.2 in May. Economists had expected the index to drop to 101.0 from the 106.4 originally reported for the previous month.
With the continued decrease, the consumer confidence index fell to its lowest level since hitting 95.2 in February of 2021.
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