Gold sheds 1% as focus shifts to Fed policy outlook

Gold bars

Gold prices retreated today, June 13, affected by the Federal Reserve's decision yesterday to fix interest rates, with policymakers now forecasting just one interest rate reduction this year — down from three cuts estimated in March.

Bullion for August delivery plummeted by 1.24%, or $29.30, to $2,325.50 an ounce at 08:18 am Makkah time, with spot prices also down 0.64% to $2,310.14 per ounce.

Similarly, silver futures for July delivery slumped 3.41% to $29.24 an ounce, in tandem with a 1.30% drop in platinum spot prices to $949.28 per ounce.

The US central bank decided yesterday to keep interest rates unchanged within the range of 5.25% and 5.50%, which is the highest level in 23 years.

The Federal Open Markets Committee (FOMC) said, “The risks to achieving its employment and inflation goals have moved toward better balance over the past year.” In recent months, there has been “modest” progress toward the 2% inflation target, but the economic outlook is “uncertain,” and the committee remains “highly attentive to inflation risks.”

For his part, in a post-meeting presser, Fed Chairman Jerome Powell underlined that the inflation expectations presented by the US central bank are somewhat conservative and may not be supported by data issued late. “It is going to be not just the inflation rate readings; it is going to be the totality of the data,” he said.

US policymakers also reduced their expectations regarding the number of interest cuts projected this year to only once, instead of three times as previously predicted at their meeting last March.