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Gold prices fell again in the global market as investors awaited fresh signals on the US Federal Reserve’s interest rate trajectory ahead of its monetary policy meeting next week.
According to Reuters, spot gold prices fell 0.6% to $4,115.50 per ounce in early Asian trading around 6am on Thursday (October 22). Prices had dropped to $4,104.33 per ounce on Wednesday, their lowest level since October 15.
Meanwhile, US gold futures for December delivery fell 0.4% to $4,132.30 per ounce.
Reuters reported that market participants are now focused on the Fed’s monetary policy meeting scheduled for October 27–28. The personal consumption expenditures (PCE) price index, due to be released next week, has also become a key indicator. The Fed closely monitors this index to assess inflation in the United States, with its target being to bring inflation down to 2%.
Almost all economists surveyed by Reuters expect the Fed to leave interest rates unchanged in October. However, rates could rise at the December meeting. According to the CME FedWatch tool, traders see a 16% chance of an interest rate hike next week, while they put the likelihood of a December rate hike at 90%.
Gold prices typically come under pressure when interest rates rise because gold does not pay interest. Higher rates increase the opportunity cost of holding the precious metal, making interest-bearing assets relatively more attractive to investors.
Other precious metals also declined. On Thursday, spot silver prices fell 1.1% to $57.33 per ounce. Platinum dropped 1.1% to $1,609.95 per ounce, while palladium fell 0.8% to $1,078.52 per ounce. Source: Agencies.
