The international gold price hit a new low in nearly two weeks, and the FED decision-makers may stick to a tough stance

On Wednesday (June 1), the international gold price hit a new low of $1,829.42 per ounce since May 19, and the Federal Reserve may have no choice but to stick to a tough policy stance. Although the latest developments in Ukraine offset some of the bearishness caused by the continued rebound in the US dollar index.

At 15:19 GMT+8, spot gold fell 0.11% to $1,835.28 per ounce; the main COMEX gold futures contract rose 0.60% to $1,837.3 per ounce; the U.S. dollar index rose 0.10% to 101.877.


U.S. President Joe Biden met with Federal Reserve Chairman Jerome Powell on Tuesday to discuss the worst inflation the U.S. is experiencing in decades. High inflation is eating into American wallets, but Biden assured Powell that the Fed will be free from political interference.

Diess, director of the White House National Economic Council, said after the meeting that the talks were very constructive. "The president emphasized to Chairman Powell at the meeting what he has been emphasizing, including today, that he respects the independence of the Federal Reserve."

Diess also agreed that the U.S. economy is in a "transition period" as the Fed's move to raise interest rates to more normal levels in order to dampen demand and ease upward pressure on prices will inevitably slow economic growth.

Gold prices are likely to fall further and the Fed may have no choice but to stick to a hawkish policy stance, according to strategists at TD Securities. Therefore, as real interest rates rise, speculative money is likely to reduce long positions in gold, which should push prices lower.

Russian troops continue to fight fiercely in the east of Uzbekistan in an attempt to take complete control of the eastern industrial city of Severo Donetsk. The United States said it would provide Ukraine with advanced rocket launchers to force Moscow to negotiate an end to the war.

Shortly after the U.S. announcement, the Russian Defense Ministry said that Russian nuclear forces were conducting exercises in the Ivanovo region northeast of Moscow, Interfax news agency reported. The report did not mention the U.S. decision to provide new weapons.

Gold is considered a hedge against inflation and a safe-haven asset during times of political and economic uncertainty, but the Federal Reserve’s hike in interest rates in response to rising spending costs has increased the opportunity cost of holding non-yielding gold.