Gold On Track for the Second Weekly Loss Following Hawkish Statements by Fed's Powell
Gold steadied near 1,960 USD per ounce on Thursday, poised for its second consecutive weekly drop, influenced by a robust US dollar and higher Treasury yields following hawkish indications from officials at the U.S. Federal Reserve.
Gold is on track for its most significant weekly decline in over a month, currently down 1.77%. At the same time, the US Dollar Index (DXY) is on course for its strongest weekly performance in two months, increasing the cost of gold for holders of other currencies. Fed officials, including Powell, tempered market expectations of a peak in U.S. interest rates on Thursday, stating uncertainty about whether the current rates are sufficient to end the fight against inflation. Thursday's data revealed a slight decrease in Americans filing for new unemployment benefits last week. Market traders have shifted their expectations for the Federal Reserve's initial interest rate cut from May to June of the following year. This adjustment reflects the higher opportunity cost of holding non-yielding assets like gold in a higher interest rate environment.
XAU/USD was declining during the Asian and early European sessions. Market participants are now turning their attention to the upcoming U.S. Michigan Consumer Sentiment report due at 3:00 p.m. UTC. Lower-than-expected figures will positively impact XAU/USD, potentially pushing the price to the 1,972 level. However, XAU/USD may continue to fall if the figures come out higher than expected.
Sell-Offs in GBP/USD Despite Positive GDP Growth, Eyes on U.S. Consumer Sentiment Report
The British pound (GBP) experienced a decline on Thursday and entered a phase of bearish consolidation and oscillating within a narrow range around the 1.22100–1.22300 area after the Federal Reserve Chair Jerome Powell's hawkish comments.
The British pound's retreat from its seven-week peak at 1.24280 on Monday found support at 1.22200, following Bank of England Chief Economist Huw Pill's revised stance on interest rates, advocating for a prolonged phase of persistent monetary restriction.
GBP/USD was essentially unchanged during the Asian session but then started to fall during the early European session after the U.K. Gross Domestic Product (GDP) report revealed slightly higher-than-expected data. Despite the monthly data showing GDP growth of 0.2% against the market's expectation of 0.0%, there were sell-offs in GBP/USD. Investors are focusing on the forthcoming U.S. Michigan Consumer Sentiment report, scheduled for release at 3:00 p.m. UTC. If the data falls short of expectations, it could favorably affect GBP/USD, possibly driving the price up to 1.22500. Conversely, if the report exceeds expectations, GBP/USD might persist in its downward trend.