Gold prices faded last week as the new enthusiasm for equities again dominated, with the S&P 500 shaking free of the bears and stumbling into a bull phase.
The question now is whether gold remains buoyant or whether the rising attraction of equities diverts investor interest and funds away from the metal and other commodities.
The gold market has been steady so far in June, trading between US$1,940 and just under US$2,000 an ounce. It ended last week at US$1,970.70 an ounce on Friday, down 0.25 per cent for the week and a touch weaker on the day.
Analysts wonder whether gold is ready for a more significant move. They think it could dip lower to the US$1,880 level or retrace back up to the US$2,000 level that the metal traded at for most of May.
But the Fed confused markets Wednesday with a "hawkish pause" and a promise of two more rate hikes, before showing confidence in the path of the economy by upgrading its 2023 GDP growth forecast to 1 per cent from 0.4 per cent and lowering its unemployment estimate to 4.1 per cent from 4.6 per cent (it is 3.7 per cent now).
Gold is holding up well in the face of the Fed's warning of two more rate hikes, OANDA senior market analyst Edward Moya told Kitco News in a weekly comment.
"The Fed locked themselves into a hold since they signalled they were going to do that before the meeting," said Moya. "There was a communication mistake by Fed Chair Jerome Powell in weeks leading up to this decision. Otherwise, data supported the hike."
At his Wednesday press conference, Powell did not commit to a rate hike in July, stating that the US central bank will remain data-dependent, added Moya.
This week sees Powell with a chance to elaborate on his comments last week.
He makes two appearances before the Congress this week and his testimony will be scrutinised closely for any change in his thinking
"Fed Chair Powell is trying to keep optionality on the table. There's a chance we could have continued softer inflation prints. He doesn't want to lock himself in," he said. "That's why gold is not at $1,900. If the Fed's dot plot was confirmed at the press conference, gold would be trading at $1,900," Moya told Kitco News.
Comex silver ended the week at US$24.27, up 1.3 per cent for the day but down 0.5 per cent for the week.
Comex copper did much better, jumping 2.9 per cent to US$3.88 a pound as the China stimulus story gathered force on Friday.
In Singapore, 62 per cent Fe iron ore fines finished the week at US$114 a tonne, up from US$112.59 the previous Friday.
And in Newcastle the price of thermal coal fell more than 7 per cent last week to end at US$138.05 for the July contract.
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Last week, US energy firms cut the number of operating oil and natural gas rigs for a seventh week in a row for the first time in nearly three years.
Energy services firm Baker Hughes said in its weekly report on Friday that the oil and gas rig count fell by 8 to 687 in the week to June 16, the lowest since April 2022.
Baker Hughes said that puts the total count down by 53 rigs, or 7 per cent, over this time last year in a move that continues to be a bullish signal for oil prices later this year if demand strengthens, especially in China.
West Texas Intermediate crude oil rose 1.1 per cent to US$71.44 a barrel at the close while the global benchmark Brent crude contract faded to end the week at US$76.21 a barrel.
WTI rose 1.56 per cent last week and Brent oil was up 1.63 per cent.
US oil rigs fell by 4 to 552 last week, the lowest since April 2022, while gas rigs fell 5 to 130, their lowest since March 2022.
Two shale regions each lost four rigs, the Permian in Texas and New Mexico, the nation's biggest oil basin, and the Marcellus in Pennsylvania, West Virginia and Ohio, the nation's biggest gas basin.
The rig count fell to 342 in the Permian, its lowest since September 2022, and 35 in the Marcellus, its lowest since March 2023, according to Baker Hughes.
