Gold prices fell sharply on Thursday as the dollar climbed higher on hawkish comments by the Federal Reserve.
After raising interest rate by another 50 basis points on Wednesday, the Fed warned that warned that interest rates would peak at a higher level than anticipated earlier. In the summary of economic projections released by the Fed, the peak federal funds rate is pegged at 5.1% versus 4.6% projected in September and 3.8% projected in June 2022.
The dollar index, which dropped to 103.54 earlier in the day, surged to 104.88, gaining more than 1%.
Gold futures for February ended lower by $30.90 or about 1.7% at $1,787.80 an ounce.
Silver futures for March ended down $0.831 at $23.305 an ounce, while Copper futures for March settled at $3.7630 per pound, down $0.1140 from the previous close.
The European Central Bank, the Bank of England and the Swiss National Bank, all raised their lending rates today. The ECB and the SNB, both have said more tightening is likely as inflation remains at elevated levels.
In U.S. economic news today, data released by the Commerce Department said retail sales slid by 0.6% in November after surging by 1.3% in October. Economists had expected retail sales to edge down by 0.1%.
Excluding a steep drop in sale by motor vehicle and parts dealers, retail sales slipped by 0.2% in November after jumping by 1.2% in October. Ex-auto sales were expected to inch up by 0.2%.
A separate report released by the Federal Reserve unexpectedly showed a modest decrease in U.S. industrial production in the month of November.
The Fed said industrial production slipped by 0.2% in November after edging down by 0.1% in October. Economists had expected industrial production to inch up by 0.1%.
The unexpected dip in industrial production came as manufacturing output fell by 0.6% and mining output slid by 0.7%.
Meanwhile, a 3.6% spike in utilities output helped limit the downside amid unseasonably cold weather across much of the country.
Separate reports from the New York and Philadelphia Federal Reserves also showed contractions in regional manufacturing activity in the month of December.
