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Gold Steadies After Recent Decline Amid Fed Rate Speculation

23 May 2024 8:24 am
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Mumbai, 23 May (Commoditiescontrol): Gold prices remained stable on Thursday after a recent rally lost momentum, leading to a more than 1% drop in the previous session. This decline occurred as traders reduced their expectations for U.S. Federal Reserve rate cuts this year.

Spot gold held steady at $2,377.48 per ounce, after hitting a record high of $2,449.89 on Monday. U.S. gold futures were down 0.6%, trading at $2,378.20 per ounce.

Minutes from the Federal Reserve's April 30-May 1 meeting indicated that achieving greater confidence in reducing inflation to 2% would take longer than previously thought. Despite recent data suggesting a downward trend in U.S. inflation, several Fed policymakers remained cautious about cutting rates too soon, although they also ruled out the need for further hikes.

Traders are increasingly doubtful that the Fed will cut rates more than once in 2024. Goldman Sachs CEO David Solomon echoed this sentiment, stating that he does not expect the Federal Reserve to reduce interest rates this year.

Gold is traditionally seen as a hedge against inflation, but higher interest rates raise the opportunity cost of holding non-yielding assets like gold.

Asian markets could face a delicate balance at the open, with concerns over the timing of U.S. and global interest rate reductions being offset by potential boosts from AI advancements and strong earnings from chip-making giant Nvidia reported late on Wednesday.

In related market movements, shares of global miner BHP Group fell more than 3% following smaller rival Anglo American's rejection of its third takeover proposal, despite agreeing to a one-week extension for a binding offer.

Other precious metals also saw declines: spot silver dropped 0.7% to $30.56 per ounce, platinum fell 0.4% to $1,031.04 per ounce, and palladium decreased 1.5% to $985.00 per ounce.

(By Commoditiescontrol Bureau: 09820130172)

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