Gold Rises From Biggest Loss In Five Months on Hawkish Fed

Gold prices rose on Thursday after capping the biggest drop in five months as the U.S Federal Reserve signaled it might raise interest rates sooner than expected.

Spot gold was up 0.5 percent at $1,820.34 per ounce, as of 6:00 am WAT. U.S. gold futures were down 2.1 percent to $1,822.

Gold prices slipped more than 2.5% on Wednesday, hitting their lowest since May 6, after hawkish comments from Fed officials lifted the dollar to a two-month high, while U.S. Treasury yields jumped.

Federal Reserve Chairman Jerome Powell told a press conference Wednesday that officials would begin a discussion about scaling back bond purchases used to support financial markets and the economy during the pandemic. They also released forecasts that show they anticipate two interest-rate increases by the end of 2023 — sooner than many thought — and they upgraded estimates for inflation for the next three years.

Gold is seen as a hedge against inflation, but a rate hike by the Fed will increase the opportunity cost of holding bullion and dull its appeal.

Analysts are now forecasting that spot gold may revisit its Wednesday low of $1,803.79 per ounce as suggested by its wave pattern.

Silver gained 0.4% to $27.08 per ounce, while palladium dropped 1% to $2,769.98 and platinum eased 0.2% to $1,120.77.