Gold prices declined as investors booked profits after prices rallied to a more than a 1-week high on soft economic projections from the U.S. Federal Reserve. The Fed policymakers predicted the U.S. economy would shrink 6.5 percent in 2020 and unemployment would still be at 9.3 percent at year’s end.
On Wednesday, the Federal Reserve made no policy changes, as expected, but pledged to continue its asset purchases aimed at stabilizing a U.S. economy that has been damaged by the pandemic coronavirus. The U.S. central bank did not announce any measures to limit the rise of bond yields, however, it reiterated its promise of continued extraordinary support, and also flagged the need to keep the interest rate near zero through at least 2022.
Spot gold was trading 0.2 percent down at $1,735.23 per ounce by 0751 GMT, having touched a high of $1,740.06 earlier, its highest since June 2. U.S. gold futures climbed 1.2 percent to $1,741.80. On Wednesday, spot gold prices surged 1.4 percent, their biggest daily percentage rise in more than a month, following the Fed's statement.
Asian shares plunged after the Fed said it would be a long road to recovery from the coronavirus-induced slump. Data out yesterday had also shown core U.S. consumer prices fell for a third straight month in May, the longest streak of declines on record.
The greenback against a basket of currencies traded 0.2 percent up at 96.22, having touched a low of 95.72 on Wednesday, its lowest since March 10. The yields were down at 0.72 percent, a sharp rally from last week’s peak of 0.96 percent.
