Gold fall in early trade as investors analyse the Fed's indications of further rate increases

15 Jun 2023 , 12:16 PM

Following the Federal Reserve’s widely anticipated pause on interest rate hikes, gold prices were unchanged on Thursday, however signs of a future increase kept bullion close to session lows.

Spot gold was dormant at $1,942.19 per ounce. To $1,954.50, U.S. gold futures saw a 0.7% loss.

The Fed indicated in recent economic predictions that higher-than-anticipated economic growth and a slower-than-anticipated decrease in inflation will likely lead to an increase in borrowing costs of another half-percentage point by the end of this year.

While authorities anticipate that price pressure will continue to cool, Fed Chair Jerome Powell said it is still too early to predict whether inflation will continue to decline.

According to the CME Fedwatch tool, traders are currently factoring in a roughly 65% possibility of a Fed rate hike in July.

Benchmark 10-year notes in Treasuries dropped to 3.788%.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust GLD, reported that its holdings decreased 0.19% to 929.70 tonnes on Wednesday from 931.43 tonnes in the previous session, a sign of sentiment.

In other news, the European Central Bank is almost set to increase borrowing costs on Thursday to their highest level in 22 years and leave the door open to additional increases, continuing its fight against high inflation even as the euro zone economy sputters.

New Zealand’s economy contracted in the first quarter as a result of the aggressive 14-year high interest rate hike by the central bank that damaged businesses and manufacturers, as well as adverse weather conditions that affected farms and caused a technical recession in the nation.

Platinum remained unchanged at $974.37, and spot silver was down 0.2% at $23.8828 per ounce. Palladium decreased by 0.1% to $1,384.50 from a prior session high of over 3%.

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