Gold prices saw a decline on Thursday after the Federal Reserve held key interest rates steady and updated its projections, which signaled only one rate cut this year.
In the UAE, gold prices declined with 24-carat gold falling to AED280 per gram, while 22-carat gold decreased to AED259.25. Twenty-one-carat gold and 18-carat gold remained stable at AED251 and AED215, respectively.
Globally, spot gold saw a 0.44 percent decline to $2,310.63 per ounce, as of 5:13 GMT. Meanwhile, U.S. gold futures declined 1.26 percent to $2,325.15.
In addition, the dollar index rose 0.17 percent, making greenback-priced gold less attractive to other currency holders, while the benchmark U.S. 10-year bond yield also rose 0.031 percent.
Inflation outlook conservative
The U.S. Federal Reserve kept interest rates steady on Wednesday as forecasts signaled one rate cut in 2024. Following the central bank’s two-day meeting, Fed chair Jerome Powell stated that the inflation outlook is relatively conservative. In addition, he added that better-than-expected inflation consumer price index data was something officials welcomed.
According to the U.S. Department of Labor, prices rose 3.3 percent in May, the lowest in three months, and down 0.1 percentage points from the month before. Meanwhile, core prices rose 0.2 percent.
Lower interest rates reduce the opportunity cost of holding non-yielding gold, raising its demand and prices.
China inflation steady
China’s consumer inflation remained steady in May while producer price declines eased. China, the biggest official sector buyer of gold, held off gold purchases in May for the first time in 18 months. However, it should resume buying once gold prices ease further. Meanwhile, its local safe-haven demand for gold coins and bars surged 27 percent during the first quarter of this year.
Read: Oil prices dip amid rising U.S. inventories as Fed keeps interest rates steady
Other precious metals
In line with the decline in gold prices, the precious metals market saw downward movement with spot silver losing 1.89 percent to $29.14. In addition, platinum saw a 1.89 percent decline to $945.26 while palladium declined 1.22 percent to $895.48.
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