Gold rates today: Yellow metal pulls back over high interest rates by US Fed, silver trades flat

Gold prices retreated on Thursday, May 2, as focus returned to chances of US interest rates staying higher for longer, with traders also positioning for more economic data that could influence the US Federal Reserve’s strategy.

Spot gold fell 0.95 per cent to $2,295.92 per ounce, while US gold futures for June delivery fell 0.25 per cent to $2,305.20 per ounce. Spot silver fell 0.26 per cent to $26.57 per ounce, while spot platinum rose 0.08 per cent to $951.00 per ounce. Meanwhile, spot palladium fell 1.73 per cent to $932.45 per ounce.

“Given the sticky inflationary environment and the relative strength of the dollar, we’ve seen some pressure on the gold market over the course of the last couple weeks,” said David Meger, director of alternative investments at High Ridge Futures. “We believe this pullback has not yet run its course.”

The Fed held interest rates steady on Wednesday and signalled it is still leaning toward eventual reductions in borrowing costs, but flagged a ‘lack of further progress’ on inflation.

The Fed’s preferred inflation measure – the personal consumption expenditures price index – increased at a 2.7% annual rate in March, an acceleration from the prior month.

Market attention has now turned to the U.S. non-farm payrolls report due on Friday, and an “extremely strong jobs number” could see the outlook for rate cuts pulled back even further, Meger said.

While gold is traditionally considered a hedge against inflation, high interest rates to tame the rising prices can increase the opportunity cost of holding non-yielding bullion.

Jim Wyckoff, senior market analyst with Kitco, attributed Thursday’s moves in gold to normal chart consolidation after Wednesday’s gains, which were based on notions that while the Fed’s statement leaned hawkish, it was not as hawkish as some might have feared.