Federal Reserve News, 19 July 2023: Gold prices eased on Wednesday from a 1-1/2-month high touched in the previous session, dragged by a slightly stronger dollar, even as investors bet that recent U.S. economic readings make the case for a pause in the Federal Reserve’s rate-hike stance.
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U.S. retail sales increased less than expected last month, rising 0.2%, against the 0.5% expected in a Reuters poll of economists.
While a 25 basis-point rate hike at the Fed’s July 26 meeting is largely expected, the U.S. central bank is “expected to retain its hawkish tone, which could pose a challenge to gold’s upside,
According to 106 economists polled by Reuters, the expected July 26 rate hike to the 5.25%-5.50% range could be the Fed’s last increase of the current tightening cycle.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
“Gold prices may have to reclaim the key psychological level of $2,000 to potentially provide more conviction for buyers,” said Yeap.
Meanwhile, the rise from Monday’s low of $1,945.65 looks too sharp to sustain, and the current correction could extend into a range of $1,961-$1,970, said Reuters technical analyst Wang Tao.
Source: Reuters
