Gold plunged to its lowest since April 2020 on Thursday amid expectations of more aggressive interest rate hikes by the Federal Reserve despite a fresh round of mixed data on the US economy.
Spot gold dipped 0.4% to $1,688.24 per ounce by 11:50 a.m. ET, having already fallen below the $1,700 mark earlier in the week. US gold futures had a more significant decline of 1.8% to $1,677.40 per ounce.
“The gold market has clearly priced in a more aggressive US Federal Reserve ahead of next week’s meeting, reflecting the central bank’s determination to fight inflation,” Carsten Menke, Head Next Generation Research at Julius Baer, told Reuters.
While the consensus is for a 75-basis-point (bps) hike, some are calling for a 100 bps increase, which is partly reflected in the gold market, Menke said, adding that a 75 bps hike could thus come as a positive surprise for the gold market.
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