Gold Prices Sagged Even Deeper Amid Solid U.S. Macro Releases

Gold and silver prices are down, with gold notching a 3.5-month low after upbeat U.S. economic data cemented expectations of more rate hikes this year, as investors are focused on a speech by Federal Reserve Chairman Jerome Powell's later in the day. August gold futures were last down $8.30 at $1,915.70/oz and spot gold fell 0.3% to $1,908.33 per ounce, hitting its lowest since mid-March earlier in the day. U.S. gold futures shed 0.3% to $1,917.40. July silver was essentially flat at $22.960.

There is a combination of negative factors which may affect gold prices' outlook going forward. Even though chances of a recession in the U.S. and eurozone remain very high, the interest rate expectations, due to stickily high inflation, look even more robust. Traders are tempted to pocket quick profits from selling bonds before economic slowdown would be officially declared.

Meanwhile, macro data remains decently fair. U.S. consumer confidence increased in June to the highest level in nearly 1.5 years, while business spending in the country remained fairly sound in May, indicating the U.S. economy remained relatively stable, at least, for now.

Investors' focus will now be shifting towards Powell's speech at tonight’s policy panel before a European Central Bank Forum in Portugal. The U.S. central bank signaled this month that borrowing costs may still need to rise by as much as 0.5 p.p. by the end of this year. As a result, many forecasts see gold falling closer to $1,850/oz levels this year based on this assumption and that interest rates might stay higher for slightly longer than the market was expecting.