Gold prices remain well below the $1,850 per ounce threshold this morning, with a resilient US dollar and rising bond yields weighing down investor confidence.
The precious metal was trading at $1,839.70 per ounce on Tuesday evening – a 0.79 per cent drop on the day – affected by calls yesterday from Federal Governor Christopher Waller in favour of a series of rate hikes worth 50 points each.
Ricardo Evangelista, senior analyst at ActivTrades said: “Unsurprisingly, such remarks supported the dollar, with the greenback recovering the losses of the previous sessions, and gold retreating due to its inverted correlation with the American currency.”
Outside the US, the European Union (EU) expects annual inflation to reach 8.1 per cent this year across its trading bloc – which has also raised expectations of a more hawkish EU response to control prices.
Commerzbank analyst Daniel Briesemann said: “In this environment, gold should really be in demand as a store of value. However, such a high inflation rate could also reignite the debate about whether the ECB should perhaps increase interest rates more quickly or sharply. Calls for a 50 basis point hike at the meeting in July could become louder, in which case gold might come under pressure.”