The price of gold or yellow metal, as some people call it, declined on Thursday morning in Asia, extending its losses after falling the most in two months. Investors continue to analyze a more hawkish-than-expected position from the Federal Reserve amid hints of “imminent” interest rate hike.
On Wednesday, the central bank indicated it could soon raise interest rates for the first time in more than three years. Furthermore, in a quarter-percentage point, its policymaking group said that increasing its benchmark short-term borrowing rate is likely forthcoming. Federal Reserve’s chairman Jerome Powell noted that the Fed could move on an aggressive path.
Federal Reserve and Gold
Gold futures dropped 0.86% to $1,813.95 by 12:18 PM ET. Usually, the dollar index moves inversely to gold. The index rose on Thursday.
The price of gold declined 1.5% during the previous session after the central bank handed down its latest policy decision.
More importantly, the fall erased gold’s gains in 2022 to date. The yellow metal rose thanks to investors. They expected that the central bank wouldn’t change its position. However, the Federal Reserve’s hawkish position altered the situation. Still, tensions in the Middle East as well as over Ukraine have the potential to boost its price.
In response to Federal Reserve’s position, Goldman Sachs Inc raised its 12-month outlook for gold to $2.150 an ounce. It altered its 12-month outlook for the yellow metal, over expectations for slower U.S. growth. Goldman Sachs also took into consideration other topics, including inflation.
At the moment, investors are monitoring several central banks. The Reserve Bank of Australia and the Bank of England are due to release their respective decisions in the following weeks.
Apart from gold, other precious metals also declined. Platinum, Silver, as well as palladium fell on Thursday morning.
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