| 21 July 2024, Sunday |

Gold slips on firmer dollar, Fed rate outlook

Gold prices fell on Wednesday as the U.S. dollar regained some ground, while investors assessed the chances of the Federal Reserve raising interest rates just once more in May before pausing.

Spot gold was down 0.6% at $1,993.99 per ounce, as of 0654 GMT. U.S. gold futures slid 0.8% to $2,003.30.

The dollar index was up 0.2%, making gold less affordable for buyers holding other currencies.

“Expectations are already priced in for a 25 basis-point hike, leaving much of the focus on whether a rate pause will be signaled thereafter,” said Yeap Jun Rong, a market analyst at IG.

“While that may provide an anchor for gold prices, given the recent rally and overextended technical conditions, the possibility of some unwinding (in prices) upon validation of the Fed’s rate outlook may still remain on the table.”

The CME FedWatch tool shows an 86.6% chance of a 25 basis-point hike in May, with rate cuts expected in the back half of the year.

Higher interest rates dim non-yielding bullion’s appeal.

  • Reuters