By Gina Lee
Investing.com – Gold was down on Thursday morning in Asia, extending its losses after falling the most in two months. Investors continue to digest a more hawkish-than-expected stance from the U.S. Federal Reserve, amid hints of an “imminent” interest rate hike.
Gold futures fell 0.86% to $1,813.95 by 12:18 PM ET (5:18 AM GMT). The dollar Index, which normally moves inversely to gold, was up on Thursday.
The yellow metal slid 1.5% during the previous session after the Fed handed down its latest policy decision. Speaking afterward, Fed Chairman Jerome Powell did not rule out raising interest rates at every meeting in a bid to curb ever-climbing inflation.
The fall erased gold’s gains in 2022 to date, with the gains driven by investor bets for continuing negative real rates even as expectations of an interest rate hike grew. With the Fed’s hawkish turn challenging that bet, safe-haven gold could still be boosted by rising geopolitical risks that include the potential Russian invasion of Ukraine.
Responding to the Fed decision, Goldman Sachs Group Inc raised its 12-month outlook for gold to $2,150 an ounce from $2,000, over expectations for slower U.S. growth, a rebound in emerging markets excluding China, and faster inflation.
“This combination of slower growth and higher inflation should generate investment demand for gold, which we consider to be a defensive inflation hedge,” analysts, including Mikhail Sprogis, said in a note on Thursday.
Investors now await the South African Reserve Bank’s policy decision, due to be handed down later in the day. The Bank of England and the Reserve Bank of Australia are also due to hand down their respective policy decisions in the following week.
In other precious metals, silver, platinum, and palladium all fell.