Gold prices fell below the level of $1,950 per ounce during these moments of trading today, Thursday, with the dollar and US bonds rising after the Federal Reserve indicated the possibility of another rise in interest rates this year.
Jerome Powell, Chairman of the US Federal Reserve, announced on Wednesday that monetary policy officials are ready to increase interest rates if conditions support this. He indicated that they will continue to hold successive meetings to follow up on the economic situation and make decisions based on the available data.
Gold and dollar now
Gold futures fell strongly to $1,947 an ounce, or 1%.
While spot gold contracts fell by 0.17% to $1,927 per ounce.
On the other hand, the dollar index rose by 0.35% to 105.142 points.
Gold at settlement yesterday
Gold prices turned higher at the settlement of trading yesterday, Wednesday, recording their highest levels since the end of August, with the decline of the dollar, before the Fed’s decision was issued.
Upon settlement, gold futures for December delivery rose 0.7%, or $13.4, to reach $1,967.1 per ounce, the highest settlement since August 30.
Yesterday, the US Federal Reserve kept interest rates unchanged, but hardened its stance on monetary tightening, as it is expected to raise interest rates again by the end of the year and tighten monetary policy until 2024 more than previously expected.
As they did in June, central bank policymakers on average expect the benchmark overnight interest rate to peak this year in a range of 5.50-5.75%, a quarter of a percentage point above the current range.
But the central bank's updated quarterly forecasts indicate that interest rates will fall by only half a percentage point in 2024, compared to expectations of a full percentage point decline during the central bank's meeting in June.
Gold on Wednesday reached its highest levels since September 1 before the US Federal Reserve revised its economic forecasts with warnings to keep interest rates higher for longer.
US Federal Reserve Chairman Jerome Powell said on Wednesday that monetary policy officials are ready to raise interest rates further if appropriate, and that they will continue to hold one meeting after another on interest rates depending on the incoming economic data.
In the wake of the FOMC decision, there were some jitters in the market given interest rate expectations. As a result, gold is still finding some buyers, limiting downside movement, at least for now, according to Tim Waterer, senior trading market analyst at KCM.
He added: “The precious metal needs a decline in Treasury yields in order to achieve gains.”
The US dollar index rose 0.4% to its highest level since March 9, while two-year Treasury yields rose to a 17-year high after the Federal Reserve kept interest rates steady, but charted a tougher policy path forward in the inflation battle. Which they now see continuing until 2026.
Later today, investors await the Bank of England's policy decision on whether to halt a series of interest rate increases extending into December 2021.
Spot silver fell 0.3% to $23.18 an ounce, platinum fell 0.9% to $919.94, and palladium fell 1.1% to $1,260.39.