Investing.com — Gold prices fell in Asian markets on Thursday, remaining near recent lows after the Federal Reserve sharply cut its outlook for interest rate cuts this year, creating further headwinds for the metal.
Gold prices fell despite falling following weaker indicators in the previous session, but the dollar steadied on Thursday as markets digested the Fed’s more hawkish outlook.
As of 00:45 ET (04:45 GMT), it was down 0.7% to $2,309.69 an ounce, while August maturities were down 1.2% to $2,325.60 an ounce.
Gold, precious metals and Fed outlook hit
Metals prices across the board fell on Thursday after Federal Reserve Chairman Jerome Powell said he expected the central bank to cut interest rates just once this year, less than the three he expects.
Some policymakers have called for holding off on rate cuts because inflation remains high. The Fed also raised its inflation forecast for this year.
The prospect of interest rates remaining high for an extended period of time bodes badly for gold and other precious metals as the opportunity cost of investing in non-yielding assets increases. This thinking led to gold prices hitting record highs over the past year that were only short-lived.
Gold was also hit by indications that several major central banks, including the People’s Bank of China, had halted gold purchases in May.
Still, Citi analysts said in a recent report that gold prices could rise to $3,000 an ounce over the next 12 months.
Other precious metals also fell on Thursday, dropping 1.3% to $951.55 an ounce and 3.3% to $29.262 an ounce.
Copper falls on worsening economic outlook
Industrial metals also fell on Thursday, with copper prices dropping as the outlook for economic activity weakened on the prospect of interest rates remaining high for an extended period.
Growing concerns about further stimulus measures in China, the largest importer, also weighed on copper sentiment as recent economic data showed a mixed recovery in the country.
Benchmark three-month metal on the London Metal Exchange fell 1.1 percent to $9,837.50 a tonne, while one-month metal fell 0.5 percent to $4.5095 a pound.
