Gold suffers worst month since 2016

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Middle East
  • Date: 01-Jul-2021
  • Source: Financial Times
  • Sector: Oil & Gas
  • Country: Middle East
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Gold suffers worst month since 2016

Gold prices suffered the biggest monthly drop in four and a half years in June after the Federal Reserve surprised investors with its willingness to control inflationary pressures with an eventual rise in interest rates, denting the appeal of holding the metal.

Gold fell 7 per cent in June to $1,779 an ounce. That still left the price within its range for the year so far, but was its worst monthly drop since November 2016. Shares in gold miners have also sunk 16 per cent this month, according to the NYSE Arca Gold Bugs index.

Gold has struggled against a stronger dollar and rising bond yields following remarks from Fed officials last month that indicated an increased likelihood of interest rate rises in 2023. Gold suffers when bond yields rise, because the metal provides no yield to investors.

Higher inflation may push the Fed to raise interest rates at least twice by the end of 2023, according to a new pollof leading academic economists for the Financial Times.

"There is not a huge amount of demand for [gold] right now," Suzanne Hutchins, a fund manager at Newton Investment Management, said. "Gold is a great barbell: it's OK if inflation is really high and it's

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