Gold prices slipped on Thursday as the U.S. Federal Reserve’s aggressive monetary policy tightening plan dimmed the metal’s appeal, with additional pressure from a rebound in equities.
Spot gold fell 0.18% to $1,849.52 per ounce by 2:12 p.m. ET (1812 GMT). U.S. gold futures settled up 0.07% at $1,847.6.
Minutes of the Fed’s May 3-4 policy meeting released on Wednesday highlighted most participants favouring additional 50 basis point rate hikes at the June and July meetings, although it was no surprise to the market.
“The minutes didn’t change anything. The market has started to realise the Fed will continue to take robust measures to control inflation,” said Bart Melek, head of commodity strategies at TD Securities.
“The tightening story is not over by any stretch of the imagination, and it’s probably a very safe bet to say that the interest rate environment will continue to get more restrictive.”
The yellow metal is highly sensitive to interest rate hikes, as it increases the opportunity cost of holding non-yielding bullion.
Gold prices are pressured in part by the stabilization of the U.S. stock indexes this week, said Kitco senior analyst Jim Wycoff in a note.
U.S. jobless claims fell last week, consistent with a labour market that remains tight amid strong demand for workers despite rising interest rates and tightening financial conditions.
Limiting the bullion’s fall, the U.S. dollar hovered near one-month lows, while the U.S. 10-year Treasury yield also fell to lowest since April.
“Gold seems to falter when it hits anything like a technical resistance and then you get long liquidation and profit taking. So this is the key issue for gold at the moment,” independent analyst Ross Norman said.
In other metals, spot silver slid 0.2% to $21.92 per ounce, platinum rose 0.7% to $949.85 and palladium rose 0.2% to $2,010.26.