Gold fell in Asia on Thursday morning, but the yellow metal recovered cautiously after recording its biggest fall in five months during the previous session. The U.S. Investors continue to digest the latest policy decision of the Federal Reserve, which indicates that interest rates may rise sooner than expected.
Gold futures were down 2.07% at $1,822.95 during the previous session from May 6. The dollar, which normally moves against gold, rose to a two-month high on Thursday and hit a 10-year U.S. low. Treasury yields rose upwards.
However, some investors were cautious and optimistic.
“Gold was crushed by the worst central bank overnight. It has caused a normal recovery in Asia, but this is more like a monolithic dip purchase and a rapid cash cut than a confidence vote on the yellow metal,” Jeffrey Haley, Onda’s senior market analyst, told Reuters.
“Gold was crushed overnight by the worst central bank in Asia, causing a natural recovery, but this is more like a cash crunch and a quicker cash cut than a confidence vote on the yellow metal,” Jeffrey Haley, Onda’s senior market analyst, told Reuters.
“The recovery of gold should be approached with caution as we have not yet seen how the change in the tone of the central bank will fully work in the markets.
When the central bank issued its decision on Wednesday, the central bank took a surprisingly bad tone. Of the 18 federal officials, 11 predict that interest rates will rise by at least two quarters of a point by 2023, a clear indication that the central bank has begun tapping into assets.
“Bargaining, haven demand, and buying tips came as gold fell to $ 1,804, although a change in the federal script benefited the dollar and treasury yields more precious metals than precious metals,” said Avtar Sand, senior commodities manager at Philip Futures.
Investors are now waiting for policy decisions from the Swiss National Bank and Norges Bank, the Bank of Japan handed over its decision on Friday.
Among other precious metals, silver and platinum fell 0.5% and palladium 1%.