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Market Update | 26/07/2023

Jul 26, 2023 | Marketupdates | 0 comments

Precious metals end a choppy session higher across the board, all eyes on the Federal Reserve

Indications only | Closing prices are bids | Prices & Charts  : Trading View | Market Research Refinitiv | See disclaimer below

Today’s Observations

As we had predicted, volatility picked up on Tuesday with gold rising from Monday’s close of $1955to $1964 in Asia. It was followed by a reversal back to $1954 in Europe and then bounced back to $1964. However, it staged yet another about turn, falling to a low for the day of $1953 on good trading volume after a strong US consumer confidence reading.

Good buying emerged to take advantage of this dip to generate a sharp rally that saw gold end a choppy session on the highs at $1965, marking a gain of 0.51% for the day. The yellow metal has traded between $1966 and $1962 so far this morning, and we can expect further price volatility today with all eyes on the Federal Reserve and the conclusion of the latest Federal Open Market Committee meeting late tonight, followed by the subsequent press conference. An increase of 25 basis points is widely expected, but the key risk event will be Jerome Powell’s comments with market participants looking for signals on the US Central Bank’s forward-looking monetary policy. The potential trading range today is a wide$1980 to $1950.

The industrial precious metals had a good day. Silver led with a 1.4% gain to $24.69, while platinum rose 1.14% to $974, and palladium added 0.55% to $1281.

Market Commentary

July 26, 2023(Reuters) – Gold prices struggled for direction in early Asian trading on Wednesday as traders awaited the U.S. Federal Reserve’s widely expected rate hike and a potential end to its monetary tightening cycle. Spot gold held its ground at $1,964.14 per ounce by 0110 GMT, while U.S. gold futures edged 0.1%higher to $1,965.90.

Market focus is on aseries of central bank meetings this week, starting from the Federal Reservepolicy decision on Wednesday, followed by the European Central Bank on Thursdayand the Bank of Japan a day later. Traders expect the U.S. Federal Reserve tokeep rates in the 5.25%-5.5% range until March 2024, according to the CMEFedWatch tool. Gold is highly sensitive to rising interest rates as theyincrease the opportunity cost of holding non-yielding bullion.

The dollar and U.S. Treasury yields held near their two-week highs from Tuesday, making zero-interest-bearing bullion more expensive for buyers holding other currencies and limiting gains. While U.S. consumer confidence increased to a two-year high in July, they remained fearful of a recession over the next year following high interest rates.

The U.S. Commerce Department is also expected to report new home sales likely fell to a seasonally adjusted annual rate of 725,000 units in June, down from 763,000units in the previous month. Meanwhile, in China, net gold imports via Hong Kong fell by about 29% to their lowest in five months in June, reflecting a sluggish economic recovery in the world’s top consumer of the metal.

Spot silver fell 0.3%to $24.61 per ounce, platinum rose 0.1% to $966.18, and palladium was up 0.3%to $1,287.86.

Gold Chart ($/oz)

Silver Chart ($/oz)

Platinum Chart ($/oz)

Palladium Chart ($/oz)

This document is issued by Value Trading BV. While all reasonable care has been taken in preparing this document; no responsibility or liability is accepted for errors of fact or for any opinion expressed herein. Opinions, projections and estimates are subject to change without notice. This document is for information purposes only and for private circulation. It does not constitute any offer, recommendation or solicitation to any person to enter into transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movements in rates or prices or any representation that any such future movements will not exceed those shown in any illustration.