Global gold prices fell during these moments of trading, today, Wednesday, to their lowest levels in about a month, as investors await the interest rate decision from the US Federal Reserve, which may provide more signals regarding the timetable for reducing interest rates.
Bullion prices fell more than $140 after hitting a record high of $2,431.29 on April 12.
“Inflation readings have shown no progress at all so far in 2024, the Fed will have to step back and focus more on a more hawkish message and the gold market is still pricing that out,” said Edward Meir, analyst at Marks.
Focus now turns to the US central bank’s monetary policy decision due at 21:00 Mecca time, followed by comments from Fed Chairman Jerome Powell. The Fed is expected to keep its benchmark interest rate steady at 5.25% to 5.5%.
If Powell takes a hawkish tone, prices could fall by $30 or $40 between today and the next day, Meyer said.
Gold is known as a hedge against inflation, but higher interest rates make holding non-yielding assets less attractive.
The Labor Department reported Tuesday that the employment cost index, which measures workers’ salaries and benefits, rose 1.2% in the first quarter. That was up from 0.9% in the fourth quarter of 2023 and above economists’ estimates for a 0.9% increase. It underscores the rise in inflation early in the year that is likely to delay interest rate cuts later this year.
U.S. home prices jumped by the most in nearly two years in February, the Federal Housing Authority said on Tuesday, reflecting the effects that a shortage of homes continues to have on the nation’s housing market. The Federal Housing Finance Agency said in its monthly home price report that prices rose 1.2% in February from January, the largest monthly increase since April 2022. On a year-over-year basis, prices rose 7%, the fastest increase since November 2022.
Gold at settlement yesterday
Gold prices fell at the end of trading on Tuesday to their lowest levels since early April, pressured by fears of a return of inflationary pressures in the United States, but they recorded monthly gains.
At settlement, gold futures for June delivery fell 2.3%, or $54.8, to $2,302.9 an ounce, but posted a monthly gain of 2.9%.
Despite the monthly gains, this is the lowest level for the precious metal's futures since the April 2 session, when it ended trading at $2,281.80 an ounce.
Gold and dollar now
Gold futures fell 0.24% to $2,298 an ounce.
Spot gold was steady at $2,287 an ounce, after hitting its lowest since April 5 earlier in the session. Prices fell as much as 2% on Tuesday due to a stronger dollar and U.S. Treasury yields.
