On Wednesday, the safe-haven yellow metal gold futures’ prices took a tattering header of more than 1 per cent after the US Federal Reserve policymakers had brought forth projections that there might be at least two quarter percentage point rate hikes by end-2023, marking off the first post-pandemic projection on rate hike.
In point of fact, according to US Federal Reserve statement that followed a two-day long meet of Fed representatives, 11 out of 18 Fed policymakers had forecasted at least two quarter percentage point rate hikes by end-2023, however, the Fed officials had kept interest rate unchanged at 0.25 per cent and pledged to continue the US Central Bank’s $120-billion monthly bond repurchase program until further signs of progress, leading to analysts’ belief that a latest leg of sharp downturn in gold futures’ prices would more likely to be shortlived as the US Fed’s report did not illustrate any policy change in a near- to intermediate- term.
Gold futures’ prices fall sharply after US Fed projects rate-hike into 2023
Citing statistics, in the day’s commodity market wind-down, spot gold futures’ prices tumbled as much as 1.1 per cent to $1,839.06 an ounce and analysts predicted further downward spiral over coming days, while US gold futures’ prices ended 0.3 per cent higher to $1,861.40 per ounce.
Alongside this, as the latest US Fed forecast seemingly had diminished the bullion’s safe-haven appeal as a hedge against a soaring inflation, the US Dollar Index (DXY) measured against a basket of six major currencies on an average had skyrocketed just a notch shy of 1 per cent to 91.34.
However, among other precious metals, silver futures gained 0.3 per cent to $27.71 an ounce, while palladium surged 1.6 per cent to $2,805.86 per ounce amid a sweeping supply restrain. Meanwhile, citing that the US Fed had been more hawkish than the market participants’ had anticipated, a senior market analyst at OANDA, Edward Moya said, “The Fed has a gameplan that they’re going to be a removing all this accommodation and it’s just this initial knee jerk reaction (in gold). ”