Gold continued its decline after Fed Chairman Jerome Powell pointed to a rate hike in his half-year speech from the House of Representatives and reiterated his emphasis on fighting inflation.
Gold slumped amid rising bond yields after Fed Chairman Jerome Powell reiterated that the central bank would continue to raise interest rates.
Spot gold is hovering near the $1,930 per ounce level. According to the calculations made on ounce gold and interbank Dollar exchange rates, gram gold is around $61.98.
In his semi-annual speech to Congress on Wednesday, Powell underlined his commitment to bring inflation back to the 2 percent target, saying two more rate hikes this year would be a pretty good forecast.
10-year bond yields rose on Thursday as markets digested Powell’s comments, putting pressure on non-interest-yielding spot gold.
Investors are focusing on the rise in the number of central banks from developed countries that have hawked more this month.
It is pricing in the UK that the Central Bank (BOE) will have to increase the pace of interest rate hikes after data on Wednesday showed inflation remained at 8.7 percent, higher than expected for the fourth month.
On the other hand, the inverse yield curve, which is a critical indicator in bond yields, rose one point after the Fed Chairman’s speech. This indicates that bond investors are concerned about the possibility of a recession that could increase gold’s appeal as a safe asset.
Gold had lost significant support as concerns over the banking crisis in the US eased and the possibility of a Fed rate cut this year was almost gone. The precious metal fell 6% from its peak in May.