Gold plunges over 2% as post-Fed slide accelerates; US Dollar climbs

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Gold plunges over 2% as post-Fed slide accelerates; US Dollar climbs

On Thursday, the precious yellow metal gold futures had nosedived as much as 2 per cent, converging towards a ‘US Fed’-driven caustic sell-off wave in the global commodity markets which had witnessed the worst intra-session decline in more than a year for a majority of safe-haven metals' futures.

On the flipside, as market participants were flocking on the American currency a day after the US Federal Reserve had signalled its first hawkish projection in more than a year and a half, hinting that at least two quarter-percentage point rate hikes might be seen by end-2023, the US Dollar Index (DXY) had scored its biggest two-day percentage gains in more than fifteen months, eventually depreciating spot gold futures’ appeal as a hedge against a higher inflation while making a swathe of precious metals costlier for the traders who were holding them on other currencies.

In factuality, the US Federal Reserve had said in a statement a day earlier that a majority of 11 Fed policymakers had forecasted at least two rate-hikes into 2023, sending a ripple effect into global commodity and equity markets which seemingly had exacerbated on Thursday.

Gold falls further as markets still deciphering US Fed’s data

Citing statistics, in the day’s commodity market round off, spot gold futures pummelled more than 2 per cent to $1,776.10 an ounce after hitting $1,766.29 earlier in the day, the lowest since May 3, while US gold futures’ prices gobbled down 4.7 per cent in losses to wind up the day at $1,774.80 per ounce.

Among other precious metals, palladium futures’ prices had taken a hefty header of 10 per cent to $2,517,18, while platinum futures were slumped 6.6 per cent to $1,048.44 and silver contracts had curbed out 4.3 per cent to $25.81 an ounce.

All major metal contracts had reported their largest intra-day plunge in more than a year. The US Dollar Index (DXY), in tandem, measured against a basket of six major currencies on an average space-dived 0.98 per cent to 91.39, remarking the strongest intra-session gain since May 11, 2020.

Meanwhile, addressing to a steep decline in physical demands alongside a sluggish speculative bets on gold futures’ prices ahead of yesterday’s Fed meet, which in effect could lead to a much-steeper rebound in spot gold prices, a TD Securities commodity strategist Daniel Ghali said, “The Fed’s dot plot is providing a clear change in tone, ultimately suggesting that although the Fed continues to reiterate that inflation is transitory, their formal assessment of risks to the economy is decisively more hawkish.