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Market News International gold prices steady, dollar rebounds, Fed hawks may retain their current stance
International gold prices steady, dollar rebounds, Fed hawks may retain their current stance
On Tuesday (May 31), the international gold price was generally stable, and the rebound in the dollar driven by the rise in US bond yields limited the upward momentum of gold prices. Gold prices are expected to record their biggest monthly decline since September last year. Aggressive rate hikes to control high inflation may still be necessary as the Fed has little impact on the supply side. Gold's downside correction seems likely to continue in June.
2022-05-31
9715
On Tuesday (May 31), the international gold price was generally stable, and the rebound in the dollar driven by the rise in U.S. bond yields limited the upward momentum of gold prices. Gold prices are expected to record their biggest monthly decline since September last year. Gold's downside correction seems likely to continue in June.
At 15:51 GMT+8, spot gold rose 0.01% to US$1,853.85 per ounce; the main COMEX gold futures contract fell 0.03% to US$1,856.8 per ounce; the US dollar index rose 0.33% to 101.692.
China's official PMI data showed that both manufacturing and services contracted in May. This, combined with concerns that global supply chain disruptions will continue to push consumer prices higher, weighed on investor sentiment and benefited the safe-haven precious metal. But higher short-term U.S. rates raise the opportunity cost of holding gold.
Jeffrey Halley, senior analyst at OANDA, said: "The overall performance of gold in May was disappointing. When the dollar strengthened, gold prices showed weakness for the first time; but when the dollar weakened or U.S. bond yields fell, the gold market could not deliver substantial benefits. If Gold prices are at risk of further weakness as U.S. and U.S. bond yields return to strength.” Halley added that unless tensions in Eastern Europe escalated sharply, the downside correction in gold appears likely to continue in June.
FXStreet analyst Dhwani Mehta said in a report that gold prices are bearish amid rising yields, "Bond market sentiment will be the key to judging the future direction of gold. In addition, it should be noted that the initial reading of euro zone inflation and the US Conference Board consumer confidence Indices may give fresh clues to broader market sentiment."
Last week saw another inflow (close to 4 tonnes) after four weeks of outflows from gold-backed ETFs tracked by Bloomberg. Speculative financial investors seem to be more open to gold of late, increasing their net long position by 40% to 61,000 contracts in the week ended May 24, according to CFTC statistics. If this turns out to be more than a flash in the pan, gold is likely to get a boost from this.
But rising U.S. wages and savings have helped consumers keep spending high. Aggressive rate hikes to control high inflation may still be necessary as the Fed has little impact on the supply side. If there is any indication that inflation will remain high, or new data suggest that the Fed is likely to maintain an aggressive rate hike strategy beyond July due to higher spending on wages and savings and a firming economy, going aggressively long in gold is not an option. Smart option.
At 15:51 GMT+8, spot gold rose 0.01% to US$1,853.85 per ounce; the main COMEX gold futures contract fell 0.03% to US$1,856.8 per ounce; the US dollar index rose 0.33% to 101.692.
China's official PMI data showed that both manufacturing and services contracted in May. This, combined with concerns that global supply chain disruptions will continue to push consumer prices higher, weighed on investor sentiment and benefited the safe-haven precious metal. But higher short-term U.S. rates raise the opportunity cost of holding gold.
Jeffrey Halley, senior analyst at OANDA, said: "The overall performance of gold in May was disappointing. When the dollar strengthened, gold prices showed weakness for the first time; but when the dollar weakened or U.S. bond yields fell, the gold market could not deliver substantial benefits. If Gold prices are at risk of further weakness as U.S. and U.S. bond yields return to strength.” Halley added that unless tensions in Eastern Europe escalated sharply, the downside correction in gold appears likely to continue in June.
FXStreet analyst Dhwani Mehta said in a report that gold prices are bearish amid rising yields, "Bond market sentiment will be the key to judging the future direction of gold. In addition, it should be noted that the initial reading of euro zone inflation and the US Conference Board consumer confidence Indices may give fresh clues to broader market sentiment."
Last week saw another inflow (close to 4 tonnes) after four weeks of outflows from gold-backed ETFs tracked by Bloomberg. Speculative financial investors seem to be more open to gold of late, increasing their net long position by 40% to 61,000 contracts in the week ended May 24, according to CFTC statistics. If this turns out to be more than a flash in the pan, gold is likely to get a boost from this.
But rising U.S. wages and savings have helped consumers keep spending high. Aggressive rate hikes to control high inflation may still be necessary as the Fed has little impact on the supply side. If there is any indication that inflation will remain high, or new data suggest that the Fed is likely to maintain an aggressive rate hike strategy beyond July due to higher spending on wages and savings and a firming economy, going aggressively long in gold is not an option. Smart option.
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