Investing.com-- Gold prices fell in Asian trade on Thursday, remaining close to recent lows as the Federal Reserve slashed its outlook for interest rate cuts this year, presenting more headwinds for the yellow metal.
Losses in gold came even as the dollar declined in overnight trade on a softer consumer price index reading. But the greenback steadied on Thursday, as markets digested a more hawkish outlook from the Fed.
Spot gold fell 0.7% to $2,309.69 an ounce, while gold futures expiring in August slid 1.2% to $2,325.60 an ounce by 00:45 ET (04:45 GMT).
Gold, precious metals hit by Fed outlook
Broader metal prices weakened on Thursday after Fed Chair Jerome Powell said the central bank only expected to cut interest rates once this year, down from prior expectations of three cuts.
Some policymakers were even seen calling for no rate cuts in the face of sticky inflation. The Fed also hiked its inflation forecast for the year.
The prospect of high for longer rates bodes poorly for gold and other precious metals, given that it increases the opportunity cost of investing in non-yielding assets. This notion has kept any record highs in gold prices brief over the past year.
Gold was also hit by signs that some major central banks, particularly the People’s Bank of China, had ceased buying the yellow metal in May.
Still, Citi analysts said in a recent note that gold could push as high as $3,000 an ounce over the next 12 months.
Other precious metals also fell on Thursday. Platinum futures fell 1.3% to $951.55 an ounce, while silver futures fell 3.3% to $29.262 an ounce.
Copper weakens on dour economic outlook
Industrial metals also clocked losses on Thursday. Copper prices fell as the prospect of high for longer rates presented a weak outlook for economic activity.
Growing concerns over more stimulus measures in top importer China also weighed on sentiment towards copper, as recent economic readings presented a mixed recovery in China’s economy.
Benchmark three-month copper futures on the London Metal Exchange fell 1.1% to $9,837.50 a tonne, while one-month copper futures fell 0.5% to $4.5095 a pound.