Gold prices declined for a third consecutive session on Thursday following the release of minutes from the latest Federal Reserve meeting, which indicated a possible inclination among some officials to raise interest rates.
As of 0746 GMT, spot gold fell 0.9% to $2,357.16 per ounce. This follows a record high of $2,449.89 on Monday, marking a 4% decline since then. U.S. gold futures also decreased, down 1.4% to $2,359.50.
The Fed’s minutes, released on Wednesday, suggested that while the immediate policy response involves maintaining current interest rates, there were discussions about potential future hikes.
“Gold faced pressure after the Fed minutes reminded investors that interest rate cuts are not imminent,” said Tim Waterer, chief market analyst at KCM Trade. Gold is traditionally viewed as an inflation hedge, but higher interest rates raise the opportunity cost of holding the non-yielding asset. Waterer added, “There is a chance gold could drift back to support levels around the $2,355 region if the dollar continues its upward momentum.”
The medium to long-term outlook for gold remains positive, contingent on the next Fed rate move being lower rather than higher, Waterer noted. Market traders are increasingly skeptical about multiple rate cuts in 2024, currently predicting a 73% chance of a rate cut by November.
In India, gold imports for 2024 may decrease by nearly 20% from the previous year due to record high prices prompting retail consumers to exchange old jewelry for new, according to an industry body head who spoke with Reuters.
ANZ analysts highlighted in a note that while physical gold demand has remained strong since 2021, a sharp price increase could curb discretionary buying in 2024. Additionally, fewer auspicious days for weddings in India and China could negatively impact jewelry demand.
Other precious metals also saw declines: spot silver fell 1.6% to $30.28 per ounce, platinum dropped 0.8% to $1,026.50, and palladium decreased 2% to $979.08.
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