Gold price Steady, Eyes US Fed Minutes
The gold market remained steady on Wednesday, maintaining its position above the key $2,400 level, as investors eagerly awaited insights from the Federal Reserve's latest policy meeting. With uncertainty looming over the timing of US interest rate cuts, bullion held firm, reflecting ongoing market anticipation and potential shifts in monetary policy.
Price Movements:
Spot gold stood its ground at $2,415.35 per ounce as of 0345 GMT, following a record high of $2,449.89 reached on Monday. Meanwhile, U.S. gold futures experienced a slight decline of 0.3%, settling at $2,419.00.
Market Analysis:
Kelvin Wong, a senior market analyst for Asia Pacific at OANDA, highlighted the role of fiat currency debasement in supporting gold prices. He emphasized the impact of rising budget deficits on developed nations, particularly the United States, and suggested that fiscal stimulus policies could further erode confidence in individual countries currencies.
Federal Reserve Minutes Awaited:
The focus of the day rested on the release of minutes from the Federal Reserve's May policy meeting, scheduled for 1800 GMT. Traders keenly monitored these minutes for fresh signals regarding the timing of U.S. interest rate cuts, with current market pricing indicating a 64% chance of a rate cut by September.
Recent data indicating a downward trend in U.S. inflation prompted discussions among Fed policymakers, who suggested a cautious approach, advocating for several more months to assess whether inflation aligns with the central bank's 2% target before considering rate adjustments.
Investor Sentiment and Outlook:
Lower interest rates, coupled with geopolitical uncertainty, continued to bolster gold's appeal as an investment asset. However, Tim Waterer, chief market analyst at KCM Trade, noted that while gold has consolidated above the $2,400 level in anticipation of potential interest rate adjustments later in the year, achieving record highs may necessitate a pullback in the dollar or bond yields or an increase in safe-haven demand.
Silver and Other Precious Metals:
Spot silver experienced a slight decline of 0.8% to $31.71, reaching an over-11-year high on Monday. Wong attributed silver's price movements to momentum-driven factors and suggested that the breakout of major resistance levels reflected a catch-up play amidst resilient gold prices. Meanwhile, platinum edged 0.1% higher to $1,047.76, while palladium dropped 0.7% to $1,018.85.
