Wednesday, October 5

Gold struggles for direction with Fed minutes on the radar


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Gold prices were little changed on

Wednesday, with gains curbed by a firmer dollar, while investors

braced for any guidance on future US interest rate hikes from

the minutes of the Federal Reserve’s latest policy meeting.

Spot gold was flat at $1,775.85 per ounce at 0845

GMT. US gold futures were little changed at $1,789.20.

Gold is struggling to find a clear direction, and so the

Fed’s minutes could represent a significant market driver, with

the central bank’s annual Jackson Hole Symposium getting closer,

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said Carlo Alberto De Casa, external analyst for Kinesis Money.

“Inflation has given some signal that we could have reached

the peak, but before seeing any further rebound in gold,

investors will probably need some dovish signal from the Fed,”

he added.

The Fed has raised its benchmark overnight interest rate by

225 basis points (bps) in total since March to tame high

inflation. Traders are pricing in a 50 or 75 bp rate hike at its

September meeting

Recent hawkish remarks from Fed policymakers has led to a

pullback in gold prices from the key $1,800 level, despite signs

of easing inflation.

Rising US interest rates increase the opportunity cost of

holding non-yielding bullion.

However, StoneX analyst Rhona O’Connell said: “the Empire

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State Manufacturing figures which were dreadful, argue for a

more benign rate hike than last time,” and that supports gold as

It thrives on uncertainty.

“The Fed has dropped its previous policy of guidance so the

minutes, which are three weeks out of date, will only really

give us a backdrop,” O’Connell said, adding the market will,

however, be waiting to read between the lines.

The dollar firmed against its rivals, with the focus

on US retail sales data and the Fed minutes.

Meanwhile, data showed British consumer price inflation

jumped to 10.1% in July, its highest since 1982.

Spot silver fell 0.6% to $20.00 per ounce, platinum

dropped 0.5% to $930.16.

Palladium was little changed at $2,152.20.

(Reporting by Arundhati Sarkar in Bengaluru

Editing by Mark Potter)



financialpost.com