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Gold shed more than 2% on Thursday, precipitating a sell-off across precious metals with palladium set for its worst day in over a year, as the dollar gained ground after the U.S. Federal Reserve struck a hawkish tone on monetary strategy.

·         Spot gold fell 2% to $1,776.10 per ounce by 1:44 pm EDT (1744 GMT), having earlier touched its lowest since May 3 at $1,766.29.

 

·         U.S. gold futures settled down 4.7% at $1,774.80.

 

·         SPDR GOLD HOLDINGS:

·         A majority of 11 Fed officials on Wednesday projected at least two quarter-point rates rise for 2023, although officials pledged to keep policy supportive for now to encourage a jobs recovery.

·         The announcement propelled the dollar to an over two-month high, eroding bullion’s allure for those holding other currencies, and drove a jump in U.S. Treasury yields, raising the opportunity cost of holding non-yielding gold.

·         “The Fed’s dot plot is providing a clear change in tone, ultimately suggesting that although the Fed continues to reiterate that inflation is transitory, their formal assessment of risks to the economy is decisively more hawkish,” TD Securities commodity strategist Daniel Ghali said.

 

Weakening physical demand and slowing speculative flows into gold, both of which began before the Fed meeting, could also help to drive a further pullback, Ghali added.

·         Adding to gold’s headwinds, the U.S. central bank said it would consider whether it should taper its asset purchases at every subsequent policy meeting.

·         Jeffrey Christian, managing partner at CPM Group, also said the scale of gold’s sell-off was accentuated by bearish technicals, and that the steeper decline in gold futures “reflects the fact that you have more trading volume and more technically oriented investors in the futures market than in spot.”

Palladium could be seeing a correction in a rally that some view as overdone, Christian added.

 

·         Palladium led the sell-off, tumbling 10% to $2,517.18, while platinum fell 6.6% to $1,048.44.

 

·         Silver slipped 4.3% to $25.81 per ounce.

 

 

·         Commodities from copper to corn tumble on China crackdown, rising dollar

The prices of commodities were falling sharply on Thursday, cutting into months of gains and weighing on equity markets, as China takes steps to cool off rising prices and the U.S. dollar strengthens.

The decline in commodities was widespread, with futures prices for palladium and platinum falling more than 11% and 7%, respectively, along with declines of nearly 6% for corn futures and 4.8% for contracts tied to copper. Oil prices were also down more than 1%.

Thursday’s move continued a slide that began earlier in the week, thanks in part to actions by Chinese regulators.

·         Copper supply shortfall could linger as green initiatives spur demand, analyst says

The underinvestment in copper over the past decade is causing supply problems now, at a time when prices have shot up and green initiatives create higher demand for the metal, says commodity analyst Reid I’Anson of market intelligence firm Kpler.

“A number of producers in this market has grown extremely conservative over the past decade. This has really caused underinvestment to kind of percolate through the supply chain, and obviously now that’s creating problems,” I’Anson told CNBC on Wednesday.

 

·         Jobless claims show surprise increase to highest level in a month

Initial jobless claims unexpectedly rose last week despite an ongoing recovery in the U.S. employment market, the Labor Department reported Thursday.

First-time filings for unemployment insurance for the week ended June 12 totaled 412,000, compared with the previous week’s 375,000. That was the highest number since May 15.

·         Sen. Tester optimistic on compromise $1T infrastructure plan Could be introduced Monday

A compromise infrastructure proposal that’s half the amount initially proposed by President Biden should be introduced in the U.S. Senate early next week, U.S. Sen. Jon Tester, D-Mont., told MTN News Thursday.

 

·         Bank of England to look through temporary inflation rise: Reuters poll

 

·         ECB's Lane says early to discuss end of emergency bond buys: Bloomberg TV

 

·         ECB's Weidmann: PEPP should end soon

 

·         ECB's Schnabel wants bond-buying green tilt

 

·         BOJ may extend pandemic-relief scheme, keep stimulus intact

The Bank of Japan is expected to maintain its massive stimulus and may extend a deadline for its pandemic-relief programme on Friday, in a sign that a fragile economy and tepid inflation will keep any exit from its ultra-easy policy a long way off.

 

·         Japan's core consumer prices rise for first time in over a year

Japan’s core consumer prices grew slightly to post their first rise in more than a year in May, largely due to a rebound in energy prices, in a welcome sign for an economy struggling with weakness in prices.

Nationwide core consumer prices, which exclude volatile fresh food costs, gained 0.1% in May from a year earlier, government data showed on Friday, matching a median market forecast.

Japan’s economy shrank an annualised 3.9% in the first quarter and is likely to grow only modestly in the current quarter as the health crisis weighs on consumption

 

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