Gold prices inched higher during the Asian trading session on Monday after an attempted coup by Wagner Group mercenaries against Russian President Vladimir Putin over the weekend, which increased demand for safe-haven assets.
During Monday afternoon’s Asian trading session, spot gold traded 0.2% higher at $1,925 per ounce. The weakening of the dollar also contributed to the bullish sentiment in gold. However, the upside potential for the commodity remained limited as Wagner chief Yevgeny Prigozhin abruptly halted his advance toward Moscow.
One factor constraining further gains in gold prices is the fear of extended rate hikes by the Federal Reserve. Despite the pause in rate hikes during the Fed’s June policy meeting, concerns have grown as Chair Jerome Powell indicated the possibility of raising rates by an additional 50 basis points this year.
Additionally, higher-than-expected inflation and a surprise 50 basis points rate hike by the Bank of England have unsettled investors, leading them to consider the possibility of prolonged rate increases in the United States.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, pointed out that exchange-traded funds have been reducing their gold holdings recently.
“Four weeks of ETF selling accelerated last week, when holdings were cut by 17 tons, the most since November, reducing total holdings to a three-month low at 2899 tons. Another peak rate delay following Powell’s testimony driving XAUUSD below support towards $1900,” he said in a tweet.
© 2023 Zenger News.com. Zenger News does not provide investment advice. All rights reserved.
Produced in association with Benzinga
Edited by Arnab Nandy