Gold prices drop on revised rate-cut bets after Fed verdict

Jun 13, 202402:02 UTC

GOLD

DXY

US10Y

XAGUSD1!

Gold prices fell on Thursday after traders gauged Federal Reserve officials' updated interest rate projections, which signalled only one U.S. rate cut this year.

FUNDAMENTALS

* Spot gold GOLD was down 0.5% at $2,311.50 per ounce, as of 0134 GMT. U.S. gold futures GOLD fell 1.2% to $2,327.20.

* The dollar DXY strengthened 0.1%, making the greenback-priced bullion less attractive for other currency holders, while the benchmark U.S. 10-year bond yield US10Y also rose. .

* The U.S. Fed held interest rates steady on Wednesday, while policymakers indicated they expect to cut rates only once in 2024.

* Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

* Fed chair Jerome Powell said the inflation outlook offered by the Fed is "a fairly conservative forecast" that may not be borne out by coming data, and is subject to revision.

* Powell added that better-than-expected inflation consumer price index data was something officials welcome.

* The headline consumer price index was flat on a month-on-month basis in May, below expectations for a 0.1% gain. Core prices rose 0.2%, also below economists' projections for a 0.3% increase.

* Gold's lightning rally to successive record highs shows every sign of continuing in the second half of 2024 as the fundamental case for bullion remains firmly in place, though $3,000 per ounce looks just out of reach, traders and industry experts said.

* China's consumer inflation held steady in May while producer price declines eased, but the underlying trend suggests Beijing would need to do more to prop up feeble domestic demand and an uneven economic recovery.

* China is the biggest official sector buyer of gold.

* Spot silver XAGUSD1! fell 2.6% to $28.94 per ounce, platinum PL1! was down 1.6% at $950.50 and palladium XPDUSD1! lost 1% to $897.25.