Gold flat as investors assess Fed’s signals on more hikes

News

Gold prices were flat on Thursday following the Federal Reserve’s widely expected pause on interest rate hikes, although hints of a further increase pinned bullion near previous session’s lows.

FUNDAMENTALS

* Spot gold was listless at $1,942.19 per ounce by 0024 GMT. U.S. gold futures lost 0.7% to $1,954.50.

* The Fed, in new economic projections, signalled that a stronger-than-expected economy and a slower decline in inflation will result in a likely rise in borrowing costs by another half-a-percentage point by the end of this year.

* Meanwhile, Fed Chair Jerome Powell said it is too soon to say inflation will continue to retreat even as officials expect price pressure to stay on a cooling trend.

* Traders are now pricing in a roughly 65% chance of Fed rate hike in July, according to the CME Fedwatch tool.
* In Treasuries, benchmark 10-year notes were down to 3.788%. * Indicative of sentiment, SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.19% to 929.70 tonnes on Wednesday from 931.43 tonnes in the prior session.

* Elsewhere, the European Central Bank is all but certain to raise borrowing costs to their highest level in 22 years on Thursday and leave the door open to more hikes, extending its fight against high inflation even as the euro zone economy flags.

* New Zealand’s economy shrank in the first quarter as the central bank’s aggressive hiking of interest rates to a 14-year high hurt businesses and manufacturers, while bad weather hit farms, putting the country into a technical recession.

* Spot silver was down 0.2% at $23.8828 per ounce, platinum flat at $974.37. Palladium fell 0.1% to $1,384.50 after rising more than 3% in the previous session.

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