Gold holds ground amid Fed's rate hike signals

Gold prices stabilized today, June 23, amid a stronger US dollar, with gains of the precious metal capped by expectations of further monetary policy tightening in the US to curb inflation, which was confirmed during Federal Reserve Chairman Jerome Powell's testimony yesterday.

Gold futures for August delivery settled at $1,837.60 an ounce at 11:25 am GMT, with spot prices falling marginally by 0.19% to $1,833.85 per ounce.

Elsewhere, silver futures for July delivery plunged by 0.68% to $21.27 per ounce. The spot price of platinum also dropped 0.53% to $921.42, while the spot price of palladium rose 0.90% to $1,880.54.

Meanwhile, the main dollar index, which measures the performance of the US currency against a basket of six currencies, surged 0.48% to 104.68 points.

Chicago Fed Bank President Charles Evans signaled yesterday that he would likely back another big interest rate hike in July unless inflation data improves, saying, “I think 75 basis points would be in line with continued strong concerns that the inflation data is not coming down as quickly as we thought,” Reuters reported.

During Powell's testimony before the House Committee on Financial Services on Wednesday, Democratic Senator Elizabeth Warren urged the central bank to proceed with cautious interest rate hikes to avoid a recession. She also warned that the rate rise could bump up borrowing costs for families and may cause job losses.

Powell's testimony continues for its second day before Congress today, as investors await the release of US weekly jobless claims data, which is expected to record 227,000 applications for last week. Markets are also anticipating disclosure of the preliminary reading of the US Manufacturing Purchasing Managers' Index (PMI).