​Gold hits near 4-month low on hawkish Fed

2023-06-29
Summary:

The Nasdaq Composite Index closed higher and the dollar rebounded on Wednesday as Federal Reserve Chair Jerome Powell suggested two more interest rate hikes are probably in the cards.

The Nasdaq Composite Index closed higher and the dollar rebounded on Wednesday as Federal Reserve Chair Jerome Powell suggested two more interest rate hikes are probably in the cards.


European stocks closed higher as strong U.S. economic data released allayed fears of a steep economic downturn, even as Lagarde warned the ECB is still not seeing enough evidence of an inflation cool-down.


Gold prices fell to their lowest in nearly 4 months on bets for interest rates remaining higher for longer.


Oil prices climbed about 3% as the second straight weekly draw from U.S. crude stockpiles was bigger than expected, offsetting demand concerns.


Commodities

Markets were pricing in a 82% chance of a rate hike at the Fed’s next meeting in July, seeing little odds of any easing in monetary policy by the end of this year, according to the CME FedWatch tool.

XBRUSD

The EIA said crude inventories dropped by 9.6 million barrels in the week ended June 23, far exceeding the 1.8-million barrel draw analysts forecast in a Reuters poll.


The 12-month backwardation for Brent and WTI both at their lowest levels since December 2022. Some analysts expect the market to tighten in the second half, citing ongoing supply cuts by OPEC+.


Forex

Earlier economic data showed the U.S. trade deficit in goods narrowed in May as imports fell, but was likely not enough of an improvement to keep trade from weighing on second quarter economic growth.


The yen, which has been under pressure as the BOJ has been an outlier among global central banks by keeping a loose monetary policy, weakened to a fresh 7-month low of 144.61 per dollar.

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