Silver trades static while yellow metal retreats due to the US Federal Reserve’s high interest rates
As for domestic prices, gold futures decreased 0.16 percent to ₹70,615 per gram on the multicommodity exchange (MCX).
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On Thursday, the price of gold began to decline as traders positioned themselves for more economic data that could impact the US Federal Reserve’s strategy.
Spot gold dropped 0.95 percent to $2,295.92 per ounce, while US gold futures for June delivery fell 0.25 percent to $2,305.20 per ounce. Spot silver fell 0.26 percent to $26.57 per ounce, while spot platinum rose 0.08 percent to $951.00 per ounce and spot palladium dropped 1.73 percent to $932.45 per ounce, as reported by Reuters.
What is driving the gold prices and the unprecedented pressure in the market? Why is gold market under pressure?
- The US Fed said on Wednesday that it is still leaning toward eventually reducing borrowing costs while holding interest rates stable. However, it also noted a “lack of further progress” on inflation. March saw an acceleration from the previous month of the Fed’s preferred inflation measure, which rose at an annual pace of 2.7%.
- The US non-farm payrolls report, which is expected on Friday, has suddenly captured the attention of the market. Analysts predict that a “very strong jobs number” might further erode the forecast for rate reduction.
- Although gold has historically been seen as an inflation hedge, owning the non-yielding bullion may come with a higher opportunity cost due to the US central bank’s high interest rates, which are maintained to control growing prices.
- After Wednesday’s gains, which were predicated on the idea that although the Fed’s announcement leaned aggressive, it was not as hawkish as some might have expected, analysts said, gold moved today to a regular chart consolidation.
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