Mubasher: Gold prices retreated on Wednesday as expectations of a big interest rate cut faded, as markets were anticipating Federal Reserve Chairman Jerome Powell’s congressional testimony, looking for cues on the monetary policy approach, Reuters reported.
By 11:38 am GMT, spot gold declined by 0.13% to $1,395.78 per ounce, while US gold futures fell by 0.19% to $1,397.80 per ounce.
“There are some expecting a cut in July but the market as a whole might have scaled back the time horizon a little bit into the future,” Quantitative Commodity Research analyst Peter Fertig was quoted by Reuters.
However, the US economy seemed “not as bad as” cutting interest rates would be necessary, Fertig said, noting that the latest US labour figures did not indicate the need for monetary easing.
Expectations for a cut by 50 basis points (bps) this month receded after a forecast-beating job growth reported last week.
“A cut of 25 bps is priced in by the markets, however Powell may look to manage future expectations going forward,” a note by MKS PAMP was quoted by the news agency.
In addition, investors awaited the tone that Fed head Powell would strike during the two-day congressional testimony, while the minutes from the central bank’s latest meeting will also be released later in the day.