Gold finishes in red with Fed rate decision in focus

Gold prices sharply fell at settlement today, June 13, as markets focus shifted to the release of US inflation data ahead of the Federal Reserve's highly-anticipated monetary policy decision.

The US dollar index, which gauges the greenback's strength against a basket of six currencies, also retreated. This came after today’s data showed a slowdown in the annual pace of growth in core consumer prices, which exclude volatile food and energy prices, surging to 5.3% in May year-on-year (YoY) and from 5.5% in April.

Elsewhere, although the rise in the Consumer Price Index (CPI) slowed to 4.0% in May — the least annual increase in more than two years, it was still well above the Fed's 2% target.

Investors are pricing in a 93% chance that the US central bank will decide to skip a rate hike and hold interest rates at the 5-5.25% range during the rate-setting committee meeting on June 13-14. Meanwhile, there is a 62.5% probability that policymakers will lift interest rates by 25 basis points during the meeting.

In terms of trading, bullion for August delivery shed 0.55%, or $11.1, to close at $1,958.6 an ounce, after landing at the $1,985.9 level in early trading.

Further, the US dollar index tumbled 0.35% to stand at 103.30 points at 08:44 pm Makkah time.