Gold fell as US interest rate cut expectations started to wane

Gold fell 0.45% to 71,256 yesterday after hawkish comments in the Federal Reserve’s most recent minutes dampened prospects of a U.S. interest rate drop. The policymakers’ heated discussion about whether the present rates are tight enough to curb inflation was evident in the minutes. Interest rate hikes in the future were discussed, even though it was agreed upon to keep them where they are for the time being.

The CME Fed Watch Tool predicts a roughly 63% chance of a rate decrease by November, which has caused traders to become less confident that the Fed would lower rates more than once in 2024. After prices fell from a record high, demand for gold in India somewhat increased, but retail sales stayed below average, forcing dealers to extend their discounts.

Compared to last week’s $10 reduction, Indian dealers were offering discounts of up to $13 per ounce over official domestic pricing. From $16–$30 last week, premiums in China decreased slightly, now hovering between $15 and $20 per ounce over benchmark market prices. Bullion was sold at par to $2.50 and par to $2.00 premiums in Singapore and Hong Kong, respectively. Dealers in Japan offered gold for $0.25 to $0.50 more than the previous week’s range.

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