The gold price fell below $1,850 per troy ounce during Thursday’s trading. Investors reacted to the Federal Reserve’s meeting in early May. It implies that US central bankers are about to continue to tighten monetary policy.
Further rate hikes on the horizon
The next rise in the US Fed’s key interest rates could come as early as June and then in July. Rates could increase by up to half a percentage point. This follows from the minutes of the Federal Reserve meeting held on 3 and 4 May. This is a clear message from US central bankers that they are serious about fighting inflation. In recent months, the US inflation rate has reached its highest level since the early 1980s, when America was crushed by the second oil shock.
The value of gold, on the other hand, fell
The price of gold started to fall in response to the Fed meeting and fell below the level of $1850 per troy ounce. Gold thus weakened by less than two tenths of a percent. The decline in the futures price suggests that the spot gold price could weaken even more in the coming days. As the market is dominated by expectations of rising interest rates, some investors are shifting money from gold to other assets that are expected to yield higher returns.
