Gold prices slipped on Thursday after an initial rally faded, as investors reconsidered the Federal Reserve’s inflation outlook following the latest policy meeting. A firmer U.S. dollar and a rebound in Treasury yields also reduced demand for the safe-haven metal.
At 00:44 ET (04:44 GMT), spot gold (XAU/USD) was down 0.4% at $4,049.99 an ounce after earlier touching a one-week high of $4,100.42. Gold Futures gained 0.3% to $4,047.20, while silver (XAG/USD) declined 0.6% to $57.32. Platinum (XPT/USD) fell 1.3% to $1,597.87.
Fed Decision Sparks Brief Gold Rally
Bullion initially strengthened after the Federal Reserve kept interest rates unchanged, as lower Treasury yields and a weaker U.S. dollar immediately following the announcement boosted demand for assets that do not generate interest income.
The rally proved short-lived, however, as investors focused on comments from Federal Reserve Chair Kevin Warsh, who reaffirmed the central bank’s determination to return inflation to its long-term 2% target despite leaving monetary policy unchanged.
The U.S. Dollar Index remained broadly steady near 100.9, while benchmark Treasury yields recovered from their post-meeting declines, limiting further upside for gold.
According to CME FedWatch data, markets now assign roughly a 64% probability to a September interest rate increase, compared with around 81% before the Fed’s latest policy announcement.
Geopolitical Risks Continue to Support Inflation Concerns
Traders also monitored renewed tensions in the Middle East after the United States carried out additional strikes against Iran overnight. U.S. Central Command described the operation as “a powerful response” to what it said were attempted Iranian attacks on American forces a day earlier.
President Donald Trump had previously pledged a strong response against Tehran, saying the United States would retaliate after the military intercepted what it described as a surprise Iranian attack targeting U.S. personnel.
The renewed conflict helped keep oil prices elevated as markets assessed the potential for further disruption to global energy supplies.
Shipping risks also increased after the Iran-backed Houthi movement warned it would target Saudi vessels travelling toward the Indian Ocean, prompting some tanker operators to consider alternative routes.
Persistently high energy prices have reinforced expectations that inflation could remain elevated for longer, potentially delaying any move by the Federal Reserve to ease monetary policy.
Focus Turns to Inflation Data
Investors are now awaiting Thursday’s release of the U.S. Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation measure, for fresh signals about inflation and the future direction of interest rates.
Attention will also shift to upcoming monetary policy announcements from the Bank of England and the Bank of Japan, both of which are widely expected to leave borrowing costs unchanged.
Leave a Reply