Gold firms as investors await Fed minutes

by Jonathan Adams
gold futures

Spot gold added 0.4% at $2,338.88 per ounce, and U.S. gold futures rose 0.6% to $2,346.80

Gold prices firmed on Wednesday, as investors awaited minutes of the Fed’s last policy meeting for further cues on the central bank’s interest rate cut path.

Spot gold added 0.4% at $2,338.88 per ounce by 0656 GMT. U.S. gold futures rose 0.6% to $2,346.80.

The dollar stayed on the back foot after dovish comments from Fed Chair Jerome Powell. A softer dollar makes bullion more attractive for holders of other currencies.

Ahead of the Fed minutes’ release at 1800 GMT, Powell said on Tuesday the U.S. was back on a “disinflationary path”, but policymakers needed more data before lowering rates.

The gold market has been holding a narrow range for a few weeks now, said Marex analyst Edward Meir, adding that bullion prices might increase later this year with all these elections up in the air.

Next on investors’ radar are the ADP employment and weekly jobless claims data due later in the day, and the nonfarm payrolls report due on Friday.

The NFP release this week could shake things up for the gold market if we see a shift in rate-cut expectations, according to Tim Waterer, KCM Trade’s chief market analyst.

Traders see a 65% probability of a Fed rate cut in September, shows the CME FedWatch Tool. Lower rates reduce the opportunity cost of holding non-yielding bullion.

There is a clear path for gold to outperform from here, likely fuelled by Western flows. Conversely, in the event that central bank demand declines drastically, rates remain elevated for longer and Asian investor sentiment flips, we could see a pullback in the second half, the World Gold Council said in its mid-year outlook report.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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