Gold prices decline as the US Fed adopts a more aggressive attitude

21 Sep 2023 , 10:49 AM

After the Federal Reserve signalled another rate hike this year and a stricter monetary policy through 2024 than anticipated, gold prices fell on Thursday as the U.S. currency and bond yields soared.

Spot gold was down 0.3% to $1,924.68 per ounce, while U.S. gold futures were down 1.1% to $1,944.90.

Prior to the U.S. Fed’s revision of its economic projections with cautions about higher rates for longer, spot gold prices on Wednesday reached their highest level since September 1.

After the Fed maintained interest rates constant on Wednesday but hardened a hawkish monetary policy stance, the two-year Treasury yields increased to a 17-year high and the U.S. dollar index increased by 0.4% to its highest level since March 9.

Non-interest-paying bullion, which is priced in dollars, is less appealing to purchase at higher interest rates.

The Fed outlined a tighter policy course going forward in the fight against inflation, which they now expect to last through 2026, but they are confident they can do so without seriously harming the economy or causing significant job losses.

One day after showing evidence that it had made progress in addressing Britain’s high inflation issue, the Bank of England will announce later in the day whether it is ending a series of interest rate increases that date back to December 2021.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, said that on Wednesday, its holdings decreased by 0.1% to 878.25 metric tonnes. 

As of the beginning of September, Russia’s gold holdings were 75.0 million troy ounces, the central bank reported on Wednesday.

Spot silver prices were down by 0.7% to $23.07 per ounce, platinum prices declined by 1.1% to $918.79, and palladium prices decreased by 1.8% to $1,251.21.

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