Gold plunged to a one -month low after the Federal Reserve (Fed) gave an optimistic outlook on economic growth and signaled that interest rates would be raised by the end of 2023.
Gold prices plunged sharply into the red ocean, failing to maintain the gains earned at the beginning of the session.
However, following a 2.5% drop in the previous session to its lowest level since May 6 at around $ 1,803 per ounce, the gold spot rose slightly in today’s Asian session by trading at $ 1,823 per ounce.
The expectation of two interest rate hikes by the end of 2023, in turn, has come as a shock to markets that initially expected the Fed to give clues to reduce its bond purchases.
Fed Chairman Jerome Powell's optimistic statement on economic growth projections that are expected to pick up stronger this year, has also pushed the US dollar to soar higher against its main rivals.
According to Powell, these optimistic projections have been supported by advances in vaccinations and strong policy support, thus driving a stronger increase in economic activity and employment in the US.
In the meantime, he also continued to reiterate his view that the rise in inflation would be temporary.
Based on Fed projections, inflation is expected to rise significantly higher at 3.4% in 2021 from 2.4% previously, but is expected to slow back to 2.1% in 2022.
