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Gold prices slump after Fed holds interest rates steady - YAHOO FINANCE
Gold (GC=F) prices slumped on Thursday morning, after the US Federal Reserve left interest rates unchanged and officials projected one rate cut for the year.
The US central bank voted in a split decision on Wednesday to hold its benchmark interest rate in the range of 3.5% to 3.75%.
Fed officials still see just one rate cut this year, the same as projected in December, as inflation remains a full percentage point above the central bank's 2% goal. Surging oil (BZ=F, CL=F) prices due to disruption as a result of the conflict between the US, Israel and Iran, has led to concerns that this could drive inflation higher.
In a press conference following the meeting, Fed Chair Jerome Powell emphasized the extra uncertainty clouding policy moves, particularly from the spike in oil (BZ=F, CL=F) prices.
"The thing I really want to emphasize is that nobody knows. You know, the economic effects could be bigger, they could be smaller, they could be much smaller or much bigger. We just don't know," he said.
"If we have a long period of much higher gas prices, that's going to weigh on consumption, weigh on disposable personal income, and it will weigh on consumption," Powell added. "But we don't know if that's going to happen."
The prospect of interest rates remaining elevated tends to dent the appeal of gold (GC=F), as a non-yielding asset. Gold futures slid 4% to $4,693.40 per ounce at the time of writing on Thursday, while spot gold fell by 2.3% to $4,714.24.
