On Thursday, gold dipped as mixed signals from the Federal Reserve showed steady rates from the central bank but warned for more hikes.
Gold futures for August delivery went down by -1.10% to $1,947.15 per troy ounce on June 15’s Asian afternoon session.
The precious metal experienced slight support even when the dollar declined to three-week lows after the Fed’s decision. They hoped for additional rate hikes to make traders cautious of non-yielding assets.
Moreover, the commodity reversed most intraday highs and remained flat on Wednesday. Also, spot gold fell by 0.20% to $1,939.01 per ounce.
Yellow metal prices struggled with the hawkish Fed outlook. Besides, markets anticipated the Fed to hold back rates. The estimated two additional hikes grew concerns from traders that expected a longer pause in the bank’s rate hike cycle.
Furthermore, gold wanted to benefit from the possibility of static US interest rates for the rest of the year. High rates would boost the opportunity of having higher prices.
However, despite deteriorating economic conditions and higher demand, foreseen rate hikes may hurt precious metal’s appeal.
Additionally, due to Fed uncertainty, gold stayed in a weak trading range for almost a month. It will likely remain in that range since there is a lack of solid signals for movement.
Dollar Strength Might Drag Gold Down
Gold fell nearly to a three-month low due to rising dollar and treasury yields. This came after the US Fed signalled more hikes this year.
New data from economic projections hinted at a more robust economy and a weaker decline in inflation. As a result, there will likely be an increase in borrowing costs by a half percentage point.
According to analyst Tim Waterer, the gold movement will depend on the length of negative remarks from the Fed.
Other experts said that they are entering a slow period for physical demand. They mentioned the yellow metal’s prices would fall in the following sessions other than a slowdown in US economic data. Therefore, it could prompt interest in the gold market.