Gold gains faded with the dollar’s recovery after Federal Reserve Chairman Jerome Powell said the central bank could start cutting asset purchases as early as November and complete the process by mid-2022.
The Bloomberg Dollar Spot index rose 0.3%, while bond yields fell, damaging demand for the precious metal.
Gold has lost more than 6% this year as central banks plan to reduce unprecedented monetary incentives that have been introduced to save economies from the effects of the pandemic.
Despite the initial reaction, the meeting definitely had a general hawkish slope from increasing the points to the assumption that the narrowing could be announced at the next meeting, all of which put pressure on the gold.
Gold fell 0.4% to $ 1,766.97 after rising 0.7% immediately after the Fed’s statement.
If progress towards the Fed’s employment and inflation targets “continues as a whole, as expected, the committee considers that a slowdown in the pace of asset purchases may soon be justified,” a statement from the Federal Reserve said on Wednesday. US Central Bank Open Market Committee.
The Federal Reserve has also published updated quarterly forecasts showing that officials are now evenly distributed on whether it would be appropriate to start raising interest rates as early as next year, according to the average estimate of FOMC participants.
Charts: with permission of Bloomberg Inc.
Junior Trader Nikolay Petrov