Gold plumbs one-week trough after hawkish Fed's minutes

Gold prices fell in European trade on Thursday on track for the third loss in a row, plumbing one-week lows after trading below $2400 and moving away from a record high on profit-taking.

The latest Federal Reserve’s meeting minutes were more bullish than expected, showing that many officials are still dismissive of any steps towards policy easing. 

Prices

Gold prices fell 1% today to $2355 an ounce, with a session-high at $2383. 

The precious metal lost 1.75% on Wednesday, the second loss in a row, and the heftiest since May 13 on profit-taking off a record high at $2450.

Both the dollar and US treasury yields were also boosted today following the release of the Fed’s minutes, in turn undermining gold prices. 

 Fed’s Minutes 

The minutes showed that Fed officials are concerned about the suitable timing of a rate cut, with several members expressing concerns about consumers using riskier financing methods to cover costs due to inflation. 

Fed officials pointed to the persistent risks of inflation, with factors including geopolitical events, and they focused on the impact on consumers, especially low-income workers. 

The Fed recently announced a decision to maintain interest rates unchanged at below 5.5% at the May meeting. 

US Rates

Following the release of the minutes, the odds of a July Fed interest rate cut fell to 16%, while the odds of a September rate cut fell to 57%.

According to the Fedwatch tool, investors now only expect one interest rate cut by the Federal Reserve this year. 

The SPDR

Gold holdings at the SPDR Gold Trust remained flat yesterday at 838.54 tonnes, the highest since February 14.