Gold prices responded dynamically ahead of the Federal Reserve’s expected decision to maintain interest rates. However, gains were tempered by profit-taking as the Fed indicated potential rate hikes to curb rising inflation.
Amidst the uncertainty preceding the Fed meeting, gold futures initially surged, but enthusiasm waned as the dollar strengthened.
Futures closed at $1,967.10 per ounce, reflecting a 0.7% increase, while the spot price saw a 0.5% rise to $1,940.56. The concurrent surge in U.S. Treasury yields impacted gold’s allure, fueled by expectations of a decisive Fed stance against inflation.
As projected, the Fed opted to keep prevailing U.S. interest rates unchanged, yet conveyed a looming rate hike to combat the persistently high inflation, surpassing the desired 3%. Fed Chair Powell affirmed their readiness to further elevate rates if necessary.
Recent history saw the Fed implement multiple interest rate hikes to counter inflation. Notably, significant interest rate determinations are also underway this week in major economies like the UK and Japan.
In tandem, the People’s Bank of China upheld their record-low key loan prime rates, coupled with sustained liquidity measures, bolstering their ongoing efforts to support a gradual economic rebound.
Investors are now closely monitoring global monetary policies, as central banks globally navigate the delicate balance of stimulating economic recovery while addressing inflation concerns, influencing gold prices and market sentiment.