Gold ticks lower after Fed officials call for more rate hikes
Gold reversed course to trade lower on
Wednesday as hawkish remarks from U.S. Federal Reserve officials
dampened hopes of a let-up in aggressive policy tightening after
tame inflation data.
Spot gold was down 0.3% to $1,788.39 per ounce by
3:34 p.m. ET (1934 GMT). It had risen to its highest since July
5 after the consumer price index (CPI) data.
U.S. gold futures settled up nearly 0.1% at $1,813.7.
Data showed U.S. consumer prices did not rise in July due to
a drop in gasoline costs, the first notable sign of a pause in
inflation that has climbed over the past two years.
“Gold initially had a knee-jerk reaction after tamer
inflation data as investors expected a less aggressive Fed. But,
then they realized the data is tamer not tame,” said Jim
Wyckoff, senior analyst at Kitco Metals.
The metal, which tends to do well in a low-interest rate
environment, came under pressure after Minneapolis Fed President
Neel Kashkari and Chicago Fed President Charles Evans reaffirmed
an aggressive path for interest rate hikes.
Kashkari said the U.S. central bank will need to raise its
policy rate to 3.9% by year-end and to 4.4% by the end of 2023
to tame inflation.
Meanwhile, Goldman Sachs cut its price forecasts for the
metal, saying that “structurally, gold is likely to remain
range-bound as growth and tightening factors continue to offset
Spot silver rose 0.2% to $20.53 per ounce, platinum
was up 0.7% to $939.97 while palladium jumped 1.5%
(Reporting by Ashitha Shivaprasad and Seher Dareen in
Bengaluru; Editing by Shinjini Ganguli and Aditya Soni)