Gold prices declined in Asian trading on Thursday, remaining near recent lows as the Federal Reserve revised down its expectations for interest rate cuts this year, posing further challenges for the yellow metal.
Despite a drop in the dollar following a softer consumer price index reading overnight, gold still saw losses. The dollar stabilized on Thursday as markets absorbed a more hawkish stance from the Fed.
Spot gold dropped by 0.7% to $2,309.69 per ounce, while August gold futures fell by 1.2% to $2,325.60 per ounce as of 00:45 ET (04:45 GMT).
The broader spectrum of metals weakened on Thursday after Fed Chair Jerome Powell indicated that the central bank now anticipates only one interest rate cut this year, a decrease from the previously expected three cuts. Some policymakers even suggested no rate cuts at all due to persistent inflation concerns. The Fed also raised its inflation forecast for the year.
The prospect of higher rates for a longer period is detrimental to gold and other precious metals, as it increases the opportunity cost of holding non-yielding assets. This factor has limited any sustained highs in gold prices over the past year.
Gold was also affected by reports that major central banks, particularly the People's Bank of China, halted their purchases of the yellow metal in May.
Despite these factors, Citi analysts noted in a recent report that gold could potentially rise to $3,000 per ounce within the next 12 months.
Other precious metals also saw declines on Thursday. Platinum futures fell by 1.3% to $951.55 per ounce, while silver futures dropped by 3.3% to $29.262 per ounce.
Industrial metals also experienced losses as copper prices fell due to concerns about prolonged high interest rates dampening economic activity. Worries over additional stimulus measures in China, a major importer, also weighed on sentiment, despite mixed economic signals from the country.
Benchmark three-month copper futures on the London Metal Exchange declined by 1.1% to $9,837.50 per tonne, while one-month copper futures fell by 0.5% to $4.5095 per pound.
Paraphrasing text from "Investing" all rights reserved by the original author.
