Gold prices fell on Thursday after the US Federal Reserve, at its latest monetary policy meeting, announced a single interest rate cut for this year, less than previously expected, despite Inflation cooled in May.
Spot gold fell 0.4% to $2,313.92 an ounce around 0340 GMT. US gold futures fell 1.1% to $2,329.50.
“While the softer consumer price index print was a net positive for gold, the takeaway from the Fed meeting was that the number of rate cuts in 2024 has narrowed and are still some distance away in the way,” said Tim Waterer, chief market analyst at KCM Trade.
“In the short term, I expect gold to trade choppyly until we have more clarity on when that first Fed rate cut may come.”
The Fed held interest rates steady on Wednesday and delayed the start of rate cuts until perhaps December, with policymakers citing still elevated inflation levels.
In their December 2023 forecasts, policymakers had anticipated an imminent start to three years of steady rate cuts.
Inflation data released hours before the Fed’s statement showed that the consumer price index (CPI) did not rise at all month-over-month in May, leading some analysts to argue that the latest forecasts were already ” stagnant”.
Last week’s strong US jobs data and reports that China’s central bank is keeping gold purchases in check last week sparked bullion’s biggest daily drop since November 2020.
Gold’s lightning rally to successive all-time highs shows every sign of continuing into the second half of 2024, as the fundamental arguments in favor of bullion remain firmly in place, although $3,000 per ounce appears to be out of reach, according to operators and industry experts.
In other metals, spot silver fell 1.9% to $29.12 an ounce, platinum fell 1.8% to $946.70 and palladium lost 1.2% to $895.57.
