🥇 GOLD drops below $1,950 per ounce

Precious metals are pulling back as Powell's hawkish comments pressure markets

A risk-averse moves can be spotted on the global financial markets today with European stock market indices dropping 0.5-1.5%. This is a response to a rather poor Wall Street session yesterday with major US stock benchmarks dropping 0.6-1.7%. Declines on Wall Street, in turn, have been triggered by hawkish comments from Fed Chair Powell yesterday as well as a weakish 30-year US bond auction. Resulting pick-up in market rates is pushing precious metals lower today.

Fed Chair Powell said yesterday that he is not certain whether Fed's stance is restrictive enough, adding that the bank will not hesitate to hike rates further should inflation development require it. While the money market still does not see any rate hikes soon, full pricing of the first rate cut was pushed back from June 2024 to July 2024. An hour before Powell hit the wires, the 30-year Treasury auction was held. A bid-to-cover ratio dropped to 2.24, the lowest since December 2021, suggesting that demand for bonds remains weaker than hinted by recent market moves.

Gold is trading 0.5% lower today, silver declines 0.6% and platinum drops 1.3%. Palladium is top laggard with a 3.7% drop with price freefalling after yesterday's drop below psychological $1,000 per ounce level. Taking a look at GOLD chart at D1 interval, we can see that precious metal erased all of yesterday's gains and is trading below $1,950 per ounce. Should price continue to fall and gold closes today's trading below the $1,950 support zone, it could be a hint that deeper declines may be looming.

Source: xStation5