Gold slips as Fed signals two more rate raises

BENGALURU: Gold prices inched lower on Thursday as the Federal Reserve forecast two more US rate increases this year after raising rates on Wednesday, although lingering worries over trade tensions between Washington and Beijing prevented steeper losses.


Spot gold was down 0.1 per cent to $ 1,298.61 per ounce at 0047 GMT. It touched an over one-week low at $ 1,292.15 an ounce in the previous session.

US gold futures for August delivery rose 0.1 per cent to $ 1,302.60 per ounce.

The Federal Reserve raised interest rates on Wednesday, a move that was widely expected but still marked a milestone in the US central bank’s shift from policies used to battle the 2007-2009 financial crisis and recession. The central bank saw two more rate hikes in 2018 for a total of four and three increases in 2019.

US producer prices increased more than expected in May, leading to the biggest annual gain in nearly 6-1/2 years, the latest sign of a gradual building up of inflation pressures.

US two-year Treasury yields, the maturity most sensitive to rate hike expectations, touched their highest in nearly 10 years while those on 10-year notes and 30-year bonds rose to three-week peaks and one-week high, respectively.

US President Donald Trump will meet with his top trade advisers on Thursday to decide whether to activate threatened tariffs on billions of dollars in Chinese goods, a senior Trump administration official said.

Trump said on Wednesday that North Korea no longer poses a nuclear threat and his top diplomat offered a hopeful timeline for a “major disarmament,” despite skepticism at home that Pyongyang will abandon its nuclear weapons following this week’s summit.

The European Central Bank will debate on Thursday whether to end its huge asset purchases by year-end, in what would be its biggest step towards dismantling crisis-era stimulus credited with pulling the euro zone economy out of recession.

Investors expect policy announcements from the European Central Bank (ECB) on Thursday and Japan’s central bank on Friday.

A former Mongolian finance minister and a businessman held since April as part of an investigation into negotiations on the Oyu Tolgoi copper and gold mine operated by Rio Tinto have been released, court sources said.

South African miner Tharisa on Wednesday deepened its exposure to Zimbabwe, saying it had bought a 26.8 per cent stake in platinum group reserves for $ 4.5 million and could increase its presence greatly if conditions are right.