Rate Edges Lower Amid Concerns About Path of Interest Rates

The spot price of gold was little changed, edging 0.2% lower to $2,308.66 per ounce as of 4 p.m. ET Wednesday, amid concerns about when the Federal Reserve might move to lower interest rates.

Increasingly Anticipating Rates Will Hold Steady in June

Market participants are currently pricing in an over 90% chance that the Fed will hold rates steady at its meeting in June, up from about 48% a month ago, according to the CME FedWatch Tool, which uses fed funds futures pricing data to project where rates could be heading. As of Wednesday, the tool showed about a 44% probability for the first 25-basis-point (bps) cut in months to come at the Fed’s November meeting.

Federal Reserve Bank of Boston President Susan Collins suggested Wednesday that the Fed may need to keep rates at current levels longer than previously thought, given recent upward surprises in inflation.

Beijing Buildup

China continued to be a big buyer of gold, with data this week showing the country’s central bank, the People’s Bank of China (PBoC), purchased 60,000 troy ounces of gold in April. That was the 18th consecutive month the PBoC has added to its stockpile.

China’s central bank isn’t the only one buying gold. The World Gold Council (WGC) reported last week that central banks have significantly increased their reserves. It noted that central bank net demand totaled 289.7 metric tons in the first quarter, “the strongest start to any year on record.” The WGC said that the three biggest buyers were China, Turkey, and India.