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Lower In Asia; Little Changed In June


Gold sits ~$4/oz weaker to print $1,833/oz, operating around session lows, and extending a pullback from Wednesday’s best levels at writing.

  • To recap, the precious metal reversed earlier losses to close ~$5/oz higher on Wednesday, with a downtick in U.S. real yields and the USD (DXY) providing limited support to the space.
  • Bullion ultimately sits little changed in June, keeping within a relatively narrow ~$45/oz trading band with debate re: the possibility of a Fed-led recession increasingly taking focus.
  • To elaborate, the latest round of Fedspeak on Wednesday saw Fed Chair Powell acknowledge that a soft landing for the U.S. economy would be “very challenging”, while declining to rule out a potential 100bp rate hike in July. Elsewhere, Chicago Fed Pres Evans (due to retire in early ‘23) said that rates would need to rise “a good deal more” in the Fed’s inflation fight, highlighting their potential negative impact on labour markets, while flagging data-dependence for rate hikes further out.
  • Looking ahead, Powell is due to speak before the House Financial Services Panel later on Thursday (1500 BST).
  • July FOMC dated OIS now price in ~82bp of tightening for that meeting after above-mentioned comments from Powell re: a 100bp hike, suggesting a ~30% chance of a 100bp move in July, up from ~70-75bp seen over the rest of the week prior.
  • From a technical perspective, previously outlined support and resistance levels remain intact at $1,787.0/oz (May 16 low) and $1,889.1/oz (trendline resistance from Mar 8 high) respectively.

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