Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinWith US markets reopened after the Juneteenth holiday closure, gold dropped 1.2% on robust housing data, falling oil, and a rising dollar ahead of this week's Congressional testimony on monetary policy by Fed Chair Jerome Powell.

Construction starts on single-family houses surged 21.7% in May, the second straight monthly increase, as homebuilders rush to meet strong demand amid low existing inventory. The number blew away consensus forecasts of a slight decline of 0.8%.

The dollar pushed 0.2% higher after the strong housing report as currency traders speculated that it may encourage further hawkishness from the Fed. Although it paused rate increases last week, the central bank signaled that another 50 basis points in hikes are on the board for later this year because of resiliency in the economy and persistent inflation.

Additional rate hikes support the dollar by making it attractive for currency traders seeking higher yield, pressuring gold in turn by making it more expensive overseas, limiting demand. Further clarity on rates is expected this week when Chair Powell makes his semi-annual visit to Capitol Hill to discuss monetary policy with lawmakers.

Gold was further pressured by a 1% slide in oil prices after China cut interest rates by less than expected, raising concerns about demand in the world's second-largest economy. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were also lower, with silver falling 3.7% while platinum and palladium lost 2% and 2.6%, respectively.

At the Comex close: August gold fell $23.50 to $1,947.70; July silver shed 89 cents to $23.23; July platinum retreated $19.30 to $968; September palladium slid $37.10 to $1,379.10 an ounce.