Gold Prices Flat as Fed Rate Hike Expectations Weigh
Gold prices remained relatively stable on Thursday, despite expectations of further Federal Reserve policy tightening. The US central bank's decision to increase its benchmark interest rate by 25 basis points to 3.75%-4.00% last week has put pressure on gold prices.
Ross Maxwell, chief strategy officer at VT Markets, noted that 'a clearer signal of another rate hike would pressure gold lower.' This is because rising interest rates tend to diminish the appeal of gold relative to interest-bearing investments.
Oil prices also had a muted impact on gold, as Iran said it remained open to diplomacy to end the US-Iran war. However, oil prices did edge lower, which provided some support for gold.
Intesa Sanpaolo economist Daniela Corsini predicted that precious metals will 'lack clear direction' and trade near an average of $4,200 per ounce for a couple of quarters.