Make Kitco Your Homepage

Powell's testimony helps take gold futures to the lowest value since March 17th

Commentaries & Views

Chairman Powell testified before the House Financial Services Committee today. This is part of his semiannual report which will conclude tomorrow when he appears before the Senate Banking Committee. His opening statement was close to a word-for-word repeat of his opening statement at last week’s press conference. Most importantly, the chairman did little to convey any new information regarding upcoming rate hikes and inflation that was not said last week.

The key takeaway from last week’s press conference and today’s testimony was twofold. First, he and other Fed officials agree that there should be further interest rate hikes. Secondly, he expects rates to remain elevated throughout the remainder of this year.

Speaking before Congress he said that it was a “pretty good guess” that the central bank would hike rates twice more this year. Powell underscored the rationale for more rate hikes saying, “Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go”.

Although the probability of a rate hike at the July FOMC meeting has declined slightly the CME’s FedWatch tool sees a 71.9% probability of ¼% rate hike at next month’s meeting.

A weaker U.S. dollar was not enough to support any increase in gold pricing today, rather gold futures traded to the lowest value since March 17. Gold futures traded to a low today of $1929.30. As of 5:37 PM EDT, the most active August contract is currently fixed at $1943.50 after factoring in a decline of $4.20 or 0.22%. The dollar lost 0.42% in value today taking the index to 101.695.

A similar decline occurred in the pricing of spot gold. According to the Kitco gold Index (KGX), dollar weakness added $8.10 of value and concurrently selling pressure resulted in a decline of $12. Spot gold is currently fixed at $1932.60 after factoring in today’s decline of $3.90.

Silver declined by 2.3% or $0.53 which took the most active July contract to $22.70. Just as silver has had a larger percentage gain when both gold and silver traded to higher pricing it has had a steeper percentage decline during price corrections.

For those who would like more information simply use this link.

Wishing you as always good trading,

Gary S. Wagner

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.