Gold Prices Drop as Fed Signals Fewer Rate Cuts Ahead
Gold prices fell on Thursday following the US Federal Reserve's recent policy meeting, which projected only one interest rate cut this year, fewer than previously expected, despite cooling inflation in May.
Spot gold was down 0.4% at $2,313.92 per ounce, and US gold futures fell 1.1% to $2,329.50.
“Although the consumer price index print was positive for gold, the Fed's reduction in the number of rate cuts for 2024 was a setback,” said Tim Waterer, chief market analyst at KCM Trade. “In the short term, I expect gold could trade choppily until there’s more clarity on the timing of the first Fed rate cut.”
On Wednesday, the Fed held interest rates steady and suggested the start of rate cuts could be delayed until December due to still-elevated inflation levels. Earlier, policymakers had forecasted a series of rate reductions starting soon.
May's consumer price index showed no month-to-month rise, leading some analysts to consider the Fed’s projections outdated.
Gold Prices Gain
Last week, strong US jobs data and reports of China’s central bank halting gold purchases caused bullion’s biggest daily drop since November 2020.
Despite this, gold's rally to record highs is expected to continue in the second half of 2024. However, traders and experts believe $3,000 per ounce remains just out of reach.
In other metals, spot silver fell 1.9% to $29.12 per ounce, platinum was down 1.8% at $946.70, and palladium lost 1.2% to $895.57.
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