Commerzbank’s Carsten Fritsch reports that Gold briefly dipped below USD 4,000 per troy ounce before bargain buying emerged, yet the metal is still heading for its largest quarterly drop in 13 years and a steep monthly decline. A hawkish shift in US Federal Reserve expectations has lifted bond yields and the Dollar, triggering heavy ETF outflows. Upcoming US labour data is seen as pivotal.

Rate expectations crush bullion

"Nevertheless, with a fall of almost 14% the gold price is on course for its biggest quarterly loss in 13 years. The monthly decline in June of around 11% is one of the sharpest in the last 15 years."

"Whilst, at the start of the quarter, market participants still saw some likelihood of the Fed cutting interest rates this year, an interest rate rise by the US Federal Reserve is now firmly priced in. This led to a rise in bond yields and an appreciation of the US dollar."

"According to Bloomberg, ETF holdings have fallen by more than 40 tons since the start of the quarter. In the last six trading days alone, ETF outflows totalled just over 30 tons."

"Thursday’s US labour market data is likely to be of great significance for future price movements. After all, the price slide began in early June following the release of surprisingly robust labour market data for May, which significantly boosted rate hike expectations."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)