Gold Dips as Fed Delays Rate Cut Expectations

Published on Aug 17, 2023 13:44

Gold futures slipped below $1920 an ounce in the mid Asia electronic trades today, falling to its lowest level in 1 month. This decline follows the release of minutes from the Federal Open Market Committee`s (FOMC) recent meeting, which extended the anticipated timeline for potential interest rate cuts by the Federal Reserve.

Fed minutes emphasize inflation concerns, potential for further policy tightening to achieve 2% target, while acknowledging robust job gains and stable banking system. Committee maintains data-driven approach, readiness to adjust policy to ensure goals amid economic and global dynamics.

COMEX international bullion futures were seen trading at $1925.50 per ounce, down by around $3. The counter is down more than 4% so far this month after registering gains of 4.1% last month. Whereas MCX gold futures were last seen trading at Rs 58502 down more than RS 150 per 10 grams. Further downside can be expected in the metal with the supports expected near Rs 58100 and Rs 57700 levels.

Dollar index has jumped above 103 mark after Fed indicated hawkish stance related to interest rate. The index is already up 1.54% so far this month and rising to its highest level since June 16.

The VIX index has gained more than 23% so far this month, indicating high volatility and low confidence in market and hence can support gold from falling steeply. he VIX index is also known as the "fear index," which measures market volatility and investor expectations of near-term market volatility.