Gold prices fell as much as 1% on
Thursday, as the U.S. dollar rallied and the Federal Reserve
flagged more interest rate hikes, diminishing the zero-yielding
Spot gold fell 0.8% to $1,660.21 per ounce by 0615
GMT, not far from a more than two-year low of $1,653.10 touched
last week. Bullion prices have declined 9% so far in the year.
U.S. gold futures were down 0.4% at $1,669.30.
“The stage setting from FOMC (Federal Open Market Committee)
suggests that there’s quite a bit more room for real rates to
keep going higher and that’s not an environment very
gold-supportive,” said Ilya Spivak, a currency strategist at
The Fed hiked interest rates by 75 basis points on Wednesday
for a third straight time and Chair Jerome Powell said bringing
down inflation was their “overarching focus.”
The Fed also projected its policy rate rising at a faster
pace and to a higher level than expected, the economy slowing
and unemployment rising.
“The rapid pace of hikes is certainly going to weigh on gold
prices, but eventually the concerns about growth and recession
will come to the fore and lead to renewed buying interest in
gold at lower levels,” said Sugandha Sachdeva, vice president of
commodity and currency research at Religare Broking.
“Even as some more pressure is likely, we don’t foresee
prices slipping below the $1,580 mark. The $1,620 to $1,580 area
is likely to provide a floor to the metal.”
Even though gold is seen as a hedge against inflation and
economic uncertainties, investors may favor other
interest-yielding assets in a high-interest rate environment.
The dollar rallied to a new two-decade high, making the
greenback-priced metal more expensive for buyers holding other
Spot silver dropped 1.1% to $19.37 per ounce,
platinum slipped 0.6% to $901.86 and palladium
fell 0.7% to $2,139.59.
(Reporting by Eileen Soreng in Bengaluru; Editing by Subhranshu