Gold continues to slide as Fed uncertainty persists

Spot gold fell 0.3% to $1,943 an ounce by late morning trade in London. Prices have now dropped over 2% so far this week, putting the yellow metal on track for its worst weekly performance since mid-September.

The declines came after a chorus of Fed officials reiterated that interest rates need to remain restrictive for longer to bring down stubbornly high inflation. Their comments led traders to scale back expectations that the U.S. central bank could start cutting rates later this year.

Hawkish comments from Fed Vice Chair Lael Brainard on Tuesday set the tone for selling this week. She warned against underestimating U.S. inflation and said rates would need to stay high for some time.

Her remarks were echoed by other Fed presidents on Wednesday, including Mary Daly of the San Francisco Fed and Neel Kashkari of the Minneapolis Fed.

The dollar and Treasury yields bounced as markets priced out some of the recent dovish tilt. A firmer greenback makes gold more expensive for overseas buyers, while higher yields increase the opportunity cost of holding non-interest-bearing bullion.

Technical indicators also pointed to further downside risks. The 50% fib retracement just above $1,900 should provide some support for gold, failing that the 61.8 level around $1,885 will be the next support level. The trajectory of the gold will be determined by what Jerome Powell says next.