Gold prices fell on Thursday tracking mixed signals from the Federal Reserve, after the central bank kept rates steady but warned that it will likely hike at least two more times this year.
The yellow metal saw little support even as the dollar sank to three-week lows after the Fed decision, with the prospect of more rate hikes keeping traders largely wary of non-yielding assets.
While Wednesday’s decision marks the first time the bank has held rates steady since embarking on a rate hike cycle in 2022, the Fed also increased its benchmark rate forecast to a peak rate of 5.6% in 2023, up from a prior forecast of 5.1%- suggesting at least two more 25 basis point hikes.
Gold in particular was expected to benefit from the prospect of U.S. interest rates remaining static for the remainder of the year, given that higher rates push up the opportunity cost of holding gold.