Gold continued to decline with the messages from the US and European central banks that further interest rate hikes could be made and the demand for safe assets decreased.
After Monday’s 0.4 percent decline, gold continued its decline as expectations for further tightening by major central banks and waning demand for safe assets.
The precious metal traded in a narrow range of $1,940-$1,980 after falling from a near-record low in May amid a lack of new catalysts to support prices.
Spot gold is trading at $1,952 an ounce. According to the calculations made on ounce gold and interbank dollar rate, gram gold finds buyers for $62.80.
While taking a break from rate hikes last week, the Fed stressed that further increases are likely and rates will be higher than previously expected. The European Central Bank also announced that the cycle of interest rate hikes is not over.
The Federal Reserve paused interest rate hikes last week, but said further increases were likely and rates would be higher than previously expected. The European Central Bank also said that the job is not done with the increase in borrowing costs. Higher rates are generally negative for non-interest bearing bullion.
On the other hand, after three years of pandemic restrictions were lifted, Chinese consumer data began to slow, driven by pent-up demand and optimism that the economy would recover quickly.
However, gold has lost some of its safe-haven support in recent weeks, with easing concerns about the spread of the banking crisis in the United States and signs of softening relations between the United States and China.
Some experts argue that the risks are not completely over. Even if rates remain high, VanEck Gold Strategist Joe Foster believes a possible recession in the US and rising geopolitical tensions could soon trigger a rally below the spotlight.
The strategist said in a note on Tuesday that the precious metal could rise to $2,075 as central banks increase their reserves and support prices.