Gold Price Drops Near USD1260 As Fed Raises Rates

London (June 15)  Gold futures tumbled Thursday, extending losses from the previous session after hawkish comments from the Federal Reserve indicating another rate hike in 2017.

The Federal Open Market Commitee voted to raise fed funds to between 1% and 1.25% and will start "gradual" shrinking of its USD4.5 trillion balance sheet "this year," it was announced yesterday.

That's despite a rough patch for the US economy. US retail sales in May were the weakest in 16 months, data showed yesterday.

Meanwhile, the rate of inflation over the past 12 months has slowed to 1.9% in May from 2.7% just in February.

Gold was down USD17.80 an ounce at USD1258, falling further from recent highs near USD1300.

The Bank of England decided to leave the record low interest rate unchanged, in a split vote, as more policymakers sought a rate hike.

The Monetary Policy Committee voted 5-3 to hold the interest rate at a record low of 0.25% but unanimously voted to maintain the quantitative easing at GBP 435 billion, the bank said in a statement on Thursday.

Source: RTTnews