September 21, 2023 (MLN): International gold prices fell on Thursday due to the Fed's projection of an additional rate hike in 2023 and reduced expectations of monetary policy easing through 2024.
International spot gold is currently trading at $1,921.28, down by 0.50% compared to the previous close.
The US Federal Reserve on Wednesday decided to leave interest rates unchanged at 5.25%-5.5%.
This marks the second time the Fed has not raised rates in the last 13 meetings.
“Gold traders took to heart the Fed’s higher-for-longer messaging, forcing bullion bulls to temper their enthusiasm,” said Exinity chief market analyst Han Tan, as Reuters reported.
The dollar climbed over a six-month peak, while benchmark 10-year Treasuries sat atop an 18-year high, weighing on greenback-priced bullion that bears no interest.
But “spot gold has so far only witnessed limited post-FOMC declines, as bullion bulls are apparently clinging on to Fed Chair Powell’s words that a US rate cut ‘will come’ eventually,” Tan added.
While markets penciled in a 45% chance of another rate hike this year, they also bet on roughly a 40% chance that the Fed will ease in the first half of 2024, according to the CME FedWatch tool.
“The precious metal will probably need to rely on some slowing momentum in Treasury yields in order to post gains of any significance to the upside,” said KCM Trade Chief Market analyst Tim Waterer.
On investors’ radar later in the day will be the Bank of England’s policy decision on whether it is halting a run of interest rate hikes that stretches back to December 2021.
International spot silver is currently trading at $23.18, down by 0.31% on the day.
