Spot Gold retreats as Fed flags one rate cut in 2024

Spot Gold retreated on Thursday after the Federal Reserve indicated just one interest rate cut this year, compared to three rate cuts projected in March, as inflation still remains elevated.

The US central bank left its federal funds rate target range without change at a 23-year high of 5.25%-5.50% for the seventh straight policy meeting in June, as largely expected.

Policy makers again noted it would not be appropriate to ease monetary policy until greater confidence was gained that inflation was moving sustainably toward the 2% objective.

The Federal Reserve did not revise its GDP growth forecasts, as it still expects a 2.1% expansion in 2024 and a 2% growth in 2025 and 2026.

However, the central bank revised up its core PCE inflation forecasts to 2.8% in 2024, from 2.6% in March, and to 2.3% in 2025, from 2.2% projected in March.

Meanwhile, annual headline consumer inflation in the United States unexpectedly eased to 3.3% in May from 3.4% in April, data showed just hours before the FOMC policy decision.

Annual core CPI inflation slowed to a more than three-year low of 3.4% in May from 3.6% in April.

“While the tamer consumer price index print was a net positive for gold, the takeaway from the Fed meeting was that the number of rate cuts in 2024 have been reduced and are still some distance down the road,” Tim Waterer, chief market analyst at KCM Trade, was quoted as saying by Reuters.

“In the short term, I expect gold could be trading in choppy fashion until we get greater clarity on when that first rate cut from the Fed may arrive.”

As of 7:17 GMT on Thursday Spot Gold was losing 0.40% to trade at $2,315.80 per troy ounce.

Gold Futures for delivery in August were retreating 1.03% on the day to trade at $2,330.60 per troy ounce.

Elsewhere, Silver Futures for delivery in July were down 2.82% to trade at $29.413 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging up 0.10% to 104.777 on Thursday.