Gold Hits One Year Low Post Powell’s Hawkish Speech

XAUUSD continued to decline on Wednesday’s Asian session hitting lowest since last July at $1223.57 after it fell 1% and hit it’s the day’s lowest at $1,225.58 on Tuesday’s American market hours. U.S. gold futures for August delivery were little changed at $1,227 an ounce.

The dollar index which measures the greenback against a basket of six major currencies was up 0.1% at 95.037 USD. The dollar was broadly higher on Wednesday, hitting a six-month peak against the Yen after Powell gave an upbeat outlook for the U.S. economy and reinforced views that the Fed was on track to gradually raise rates.

Gold and Silver Suffer

Another central banker on Tuesday said that with the U.S. economy firing on all cylinders, the Fed should ease away from monetary policy accommodation and move interest rates up far enough to prevent unwanted inflation but not so fast that a recession ensues. Interest rates tend to boost the dollar and push up bond yields, making greenback-denominated gold more expensive for holders of other currencies and denting its appeal.  Similar to Gold, Silver XAGUSD also hit one year low at $15.42 and continues to trade around $15.40/45 price handle. With the USD on a solid footing, precious metals prices should stay pressured lower for the foreseeable future as gold has wholly lost its glittering appeal in this enduringly bullish equity and USD environment.

The American Petroleum Institute (API) on Tuesday reported an increase of about 0.63 million barrels in the U.S. crude oil inventories for the week ending July 13. In the previous week, API reported draws of nearly 6.8 million barrels in the U.S. crude oil inventories for the week ending July 6. Oil prices went up slightly on Tuesday after slumping over 4 percent in the previous session.

The West Texas Intermediate (WTI) for August delivery added two U.S. cents to settle at 68.08 dollars a barrel on the New York Mercantile Exchange on Tuesday, while Brent crude for September delivery increased 0.32 dollar to close at 72.16 dollars a barrel on the London ICE Futures Exchange. Currently U.S. West Texas Intermediate crude is down 27 cents, or 0.4% at $67.82. Investors are currently waiting for Crude Oil Inventory data scheduled to release later today before placing medium-long term bets.