Bengaluru — Gold prices fell more than 1% on Wednesday, retreating from a six-year peak scaled in the previous session, on signs that the US Federal Reserve will not resort to aggressive interest rate cuts in July.

Spot gold was down 1.2% at $1,405.44 an ounce as of 11.08am GMT, snapping a six-session winning streak that lifted it to $1,438.63 on Tuesday, the highest since May 14, 2013. US gold futures fell 0.7% to $1,409.10.

Fed chair Jerome Powell stressed the central bank’s independence from US President Donald Trump, who is pushing for rate cuts. St Louis Fed president James Bullard, considered one of the most dovish US central bankers, surprised some investors by saying a 50-basis-point cut in rates “would be overdone”.

“We have had quite a move higher in gold. There is an element of profit-taking and the catalyst for that [were] the comments from the Fed yesterday,” ING analyst Warren Patterson said. “Perhaps, the markets got ahead of itself over the outlook for rate cuts this year, which had driven gold higher. The realisation that we are not going to see as many cuts as we were anticipating is weighing on gold at the moment.”

Also hurting bullion’s appeal, the dollar index gained 0.1% on Wednesday, crawling away from multi-month lows.

Even as the Fed played down big rate cuts, investors are still expecting at least a quarter percentage point reduction. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Despite falling almost $30 from the six-year high, gold is still up 8% so far this month.

“There will be short term volatility, but our positive conviction on gold has not changed,” said Heng Koon How, head of markets strategy at Singapore’s United Overseas Bank, adding that the bank saw gold hitting $1,500 by mid-2020. “Gold has had a strong ‘melt up’ over the past month. So some short-term profit-taking is to be expected.”

The next move in gold could be decided by the outcome of trade talks between the US and China during the G20 summit in Japan on Saturday, analysts said.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.3% to 799.61 tonnes on Tuesday from 801.96 tonnes on Monday.

Meanwhile, gold demand in India could fall to its lowest level in three years as a rally in local prices to a record high dents retail purchases.

Among other precious metals, silver fell 0.6% to $15.27 an ounce and palladium rose 0.3% to $1,531. Platinum was up 0.1% to $806.57 an ounce.