June 13 (Reuters) – Gold prices fell on Thursday after traders gauged Federal Reserve officials’ updated interest rate projections, which signalled only one U.S. rate cut this year.
Fundamentals
* Spot gold was down 0.5% at $2,311.50 per ounce, as of 0134 GMT. U.S. gold futures fell 1.2% to $2,327.20.
* The dollar strengthened 0.1%, making the greenback-priced bullion less attractive for other currency holders, while the benchmark U.S. 10-year bond yield also rose.
* The U.S. Fed held interest rates steady on Wednesday, while policymakers indicated they expect to cut rates only once in 2024.
* Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
* Fed chair Jerome Powell said the inflation outlook offered by the Fed is “a fairly conservative forecast” that may not be borne out by coming data, and is subject to revision. This cautious outlook could impact market sentiment and gold prices in the coming months.
* Powell added that better-than-expected inflation consumer price index data was something officials welcome, highlighting potential positive trends in the economy that could influence gold prices.
* The headline consumer price index was flat on a month-on-month basis in May, below expectations for a 0.1% gain. Core prices rose 0.2%, also below economists’ projections for a 0.3% increase, indicating potential economic uncertainties that could impact gold prices.
* Gold’s rally to record highs could potentially continue in the second half of 2024, driven by the persistent demand for safe-haven assets amid economic uncertainties. However, reaching $3,000 per ounce may pose a challenge, according to market observers, as market dynamics evolve.
* China’s economic indicators, such as consumer inflation and producer price declines, suggest a need for further economic measures to stimulate domestic demand and support economic recovery. Any developments in China’s economy could have a ripple effect on gold prices due to the country’s significant position as a gold buyer.
* Spot silver fell 2.6% to $28.94 per ounce, platinum was down 1.6% at $950.50, and palladium lost 1% to $897.25, reflecting the broader trends in precious metals alongside gold.
DATA/EVENTS (GMT)
1230 US Initial Jobless Clm Weekly
1230 US PPI Machine Manuf’ing May
(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Sherry Jacob-Phillips)
