Gold sinks to its 3-week lows
On Thursday, gold futures slumped to their three-week minimums during European trade, thus contributing to overnight losses. The commodity simply followed the Fed’s minutes, dropping an apparent hint at a forthcoming rate hike in June.
In New York, June delivery gold futures dropped to $1,253.20 – the value not seen since April 28. Last the commodity stood at $1,255.55, showing a 1.49% slump. A day before the most valuable precious metal descended 0.2%.
The Fed’s minutes for April 26-27 policy gathering, released on Wednesday, disclosed that the US major bank was likely to increase rates in June of the country boasts stronger second-quarter growth.
Fed funds futures were pointing out to a 34% probability of a June rate increase by Thursday morning. However, a bit earlier their forecast was just 16% before the issue of the hawkish Fed minutes on Wednesday. A week ago, they didn’t give it more than 4%.
Gold is quite sensitive to moves in American rates, as a surge would raise the opportunity cost of holding non-yielding assets, including bullions.