Gold holds steady as investors eye Fed minutes

Gold prices remained flat on Wednesday morning as investors awaited the release of the Federal Reserve’s latest policy meeting minutes. The minutes are expected to provide clues on when the US central bank might begin reducing interest rates.

Spot gold hovered around $2,331.97 per ounce by 03:56 GMT, with little change. US gold futures, on the other hand, saw a slight increase of 0.3 per cent, reaching $2,340.20.

Marex analyst Edward Meir notes that the gold market has been stable for weeks, trading in a narrow range. He predicts that gold prices may rise later in the year due to election uncertainty.

Chair Jerome Powell stated on Tuesday that the US is heading towards disinflation. More data is needed to confirm recent inflation readings before any rate cut considerations. Fed minutes are set for release at 18:00 GMT.

Later today, investors will be keeping an eye on the release of ADP employment data, weekly jobless claims, and the highly anticipated nonfarm payrolls (NFP) report scheduled for Friday.

The NFP data this week has the potential to significantly impact the gold market, particularly if it alters expectations for a rate cut, stated Tim Waterer, chief market analyst at KCM Trade.

Currently, the CME FedWatch Tool suggests a 67 per cent chance of the Fed reducing rates in September. Lower interest rates make holding non-interest-bearing gold more attractive.

The World Gold Council, in its mid-year outlook report, projected a clear path for gold to outperform moving forward, likely fuelled by investments from Western markets.

However, the report also cautioned that a drastic drop in central bank demand, prolonged high-interest rates, and a shift in Asian investor sentiment could lead to a pullback in the second half of the year.

While gold prices remained steady, other precious metals saw some movement. Spot silver rose slightly by 0.4 per cent to $29.63 per ounce, and platinum gained 0.7 per cent, reaching $997.85 per ounce.

Palladium, however, dipped 0.7 per cent to $1,014.64 after briefly touching a one-week high earlier.

Attribution: Reuters