Gold prices sink as Fed affirms aggressive policy stance

Gold futures tumbled today, Aug. 3, as the Federal Reserve affirmed the central bank’s sharp monetary policy tightening stance to rein in inflation, amid investors' concerns about its impact on growth in light of escalating tensions between China and the US.

Gold futures for December delivery shed 0.38% to $1,782.80 an ounce at 10:24 am Makkah time, while spot prices rose 0.31% to $1,766.40 per ounce.

Similarly, silver futures for September delivery fell 1.26% to $19.88 an ounce. The spot price for platinum also dropped by 0.40% to $890.47, but the spot price of palladium gained 1.05% to $2084.36.

The main dollar index, which measures the performance of the US currency against a basket of six currencies, declined 0.18% to 106.15 points.

St. Louis Fed President James Bullard affirmed the central bank’s commitment to its inflation target, and to take the necessary measures to meet it. “The Fed and the [European Central Bank] may be able to disinflate in an orderly manner and achieve a relatively soft landing,” Bloomberg reported Bullard as saying.

This exacerbated tensions between the US and China over Taiwan after House Speaker Nancy Pelosi’s visit to the island yesterday, and following the affirmation of her country's support for the democratically-elected government.

This came amid warnings from Beijing about the consequences of this visit, which may push it to take measures to defend its territorial integrity, including military intervention.