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Gold slips after Powell reiterates aggressive tightening plan

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Gold gave up initial gains and edged

lower on Thursday as the dollar regained momentum after U.S.

Federal Chairman Jerome Powell reiterated more aggressive

monetary tightening to tame inflation, even as economic risks

mount.

Spot gold fell 0.3% to $1,831.72 per ounce by 12:31

p.m. ET (1631 GMT). U.S. gold futures inched 0.2% lower

to $1,834.70.

After Powell said the Fed’s commitment to curbing inflation

was ‘unconditional’, the dollar index resumed its uptick,

dimming gold’s appeal, especially among overseas buyers.

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While gold is considered a hedge against inflation and

economic uncertainties, rising interest rates reduce appeal for

the asset, which pays no interest.

The gold and silver markets were also being weighed down by

expectations that the overall economic slowdown could also

hamper demand for the metals, although “gold’s safe haven status

is limiting the downside,” said Jim Wyckoff, senior analyst at

Kitco Metals.

Meanwhile, U.S. yields fell to their lowest in almost two

weeks, while fears about an economic slowdown continued to

mount, further hurt by Powell’s indication that the Fed’s fight

against inflation may come at the cost of rising

unemployment.

Investors also took stock of data showing a dip in U.S.

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weekly jobless claims last week as labor market conditions

remained tight, though some slowing is emerging. Meanwhile, U.S.

business activity slowed considerably in June, a survey showed.

Bank of China International analyst Xiao Fu said while gold

will attract buying due to recession risks, the rising rates are

very powerful in terms of impacting asset classes, including

gold.

Spot silver fell 0.9% to $21.20 per ounce, platinum

was down 1.4% at $913.33. Palladium fell 0.9% to

$1,847.30.

(Reporting by Ashitha Shivaprasad and Arundhati Sarkar in

Bengaluru; editing by David Evans and Shinjini Ganguli)



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