Gold pressured ahead of Powell’s speech

The Gold Index prolonged its losses for the second successive day. Gold is struggling to stay above the $1820 mark amidst the prevalent positive market sentiment that witnessed a jump in riskier assets, weighing on safe-haven assets, particularly in the precious metal segment.

Gold trades at $1820.72, recording minimal losses of 0.10%. The Gold Index price action, on Tuesday, illustrates that it is entering a consolidation phase before resuming Monday’s downtrend, swinging around its low at $1820.61. Yet, it noteworthy that gold is expected to encounter solid support around the June 24 low at $1816.64.

So far, market sentiment and the stronger US dollar weighed on the gold price. Global equities rallied on positive news from China. Beijing cut the Covid-19 quarantine for travelers, which was greatly cheered by investors, shifting from the negative sentiment of Monday’s Wall Street session. In the meantime, US consumer confidence fell in June to its lowest level in 12 months, as inflation dampened US citizens’ economic conditions.

Remarks by Fed speakers continue to catch the market’s attention. On Tuesday, the NY Fed President John Williams said that officials would discuss whether to hike 50 or 75 bps the Federal funds rate in the next month. Williams added that policymakers would be data-dependent and that he does not foresee a recession in his baseline, though he acknowledged the US economy might slow down.

Outflows from gold ETFs could add some pressure on gold. Holdings in the gold ETFs tracked by Bloomberg were reduced by 6 tons yesterday. The momentum of outflows has picked up pace again of late.

The Richmond Fed Manufacturing Index added to the ongoing Fed regional indices displaying negative readings and could be a prelude to July’s ISM Manufacturing PMI.

The US economic docket will feature later the San Francisco’s Fed Mary Daly, and by Wednesday, Cleveland’s Fed President Loretta Mester and Fed Chair Jerome Powell will have awaited speech.