Weekly Market Report | 26/06/2023

Gold Slumps to a Three-Month Low as Jerome Powell Strikes a Hawkish Tone

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Summary

Gold had a subdued beginning to the new week on Monday, with the absence of the United States markets causing the price to ease from an early week high of $1958, recorded in Asia, to a low of $1948 in Europe. It eventually closed 0.41% lower at $1950 amid light trading volume. Silver fell 0.95% to $23.96, platinum ended at a low, down 0.81% at $978, and palladium also decreased by 0.5% to $1402.

On Tuesday, Gold dipped to $1946 in Asia but then rallied to $1956 before falling 1.28% to $1931 in New York. This happened amid high volume following the release of stronger than expected United States housing data. The data underlined the strength of the United States economy and reignited concerns over a resumption of the Federal Reserve’s rate hike program in July. The yellow metal ended with a reduced 0.72% loss at $1936. Silver had a tough day, falling 3.34% to $23.16 on heavy volume. Platinum fell 1.43% to $964, and palladium declined 1.64% to $1379.

Gold remained calm in Asia on Wednesday, fluctuating narrowly between an early day high of $1939 and $1936, but was more active in Europe. The price dipped to $1932 ahead of the New York opening as the markets anticipated Jerome Powell’s semi-annual address to Congress, which was seen as the key risk event of the day. It came as no great surprise when the Federal Reserve Chairman struck a hawkish tone, warning of more rate hikes ahead. This prompted a sharp sell-off to a fresh three-month low of $1920 on high volume. However, this latest dip found willing buyers, with the price recovering to $1937 before ending with a marginal 0.15% loss at $1933. Silver declined by another 2.16% to end at $22.66; platinum ended at the lows and down 1.76 % at $947, palladium fell 2.54% to $1344.

On Thursday, Gold fell from an early high of $1935, recorded in Asia, to a low of $1913 in late New York trading. This occurred amid reasonable volume as Federal Reserve Chairman Powell completed his semi-annual testimony to Congress, reinforcing the United States Central Bank’s hawkish approach to monetary policy. The yellow metal ended slightly above the lows, down 0.98% at $1914. Silver extended its decline into a fourth straight session to end down 1.77% at $22.26, platinum fell 2.43% to end at the lows at $924, and palladium slumped 5.06% to $1276.

Gold fell to a ten-week low of $1911 in Asia on Friday as the United States dollar strengthened but recovered to post a morning benchmark of $1919.35 in London due to physical and probable Central Bank buying. It then spiked to a day’s high of $1937 after the release of weaker than expected Global Purchasing Managers’ Index data. However, the yellow metal surrendered most of its gains to end a volatile session with a reduced 0.31% advance at $1920 on the day but was down 1.94% on the week. The week was dominated by Jerome Powell’s hawkish testimony to Congress. Silver recovered from a three-month low of $22.14, posted on Friday, to end with a 0.49% gain at $22.37, but fell 7.52% over the week.

Platinum ended a quiet session with a modest 0.22% loss at $920 and was down 6.69% on the week. Palladium ended unchanged on Friday at $1276 but down 9.44% for the week.

Looking ahead, a volatile week can be expected due to a number of United States economic reports and several Federal Reserve speeches, headlined by Jerome Powell. Gold seems poised to threaten the pivotal $1900 level, with a clear break bringing the 200-day Moving Average set just above $1850 onto technical radar screens. However, rising geopolitical tensions could help gold avoid a damaging summer sell-off.

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.