NEW YORK: Gold prices were steady on Wednesday with investors eyeing the release of minutes from the US Federal Reserve’s November policy meeting for guidance on the central bank’s rate hike trajectory.
Spot gold rose 0.1% to $1,741.75 per ounce by 10:25 a.m. ET (1525 GMT), while US gold futures were unchanged at $1,739.80.
“The focal point of the day is the Fed Minutes ... prior to that we’ve swung on either side of unchanged so far this morning,” said David Meger, director of metals trading at High Ridge Future.
Minutes from Fed’s last meeting are due at 2:00 p.m. ET (1900 GMT). Traders expect the central bank to deliver a 50-basis point hike at its December meeting, with rates peaking in June.
“The idea that (the Fed) are getting close to being done (with rate hikes) early next year is a positive underlying environment,” Meger highlighted.
“Knowing that the bulk of those interest rate hikes are already factored into the market, I would say there is no longer a dark cloud of interest rate hikes looming over the gold market.” The Fed has raised its policy rate by 375 basis points this year from near zero to a 3.75%-4.00% range as it battles high inflation in what has become the fastest rate-hiking cycle since the 1980s.
Higher rates increase the opportunity cost of holding non-yielding gold.
Also helping gold, the dollar was down 0.6%, making gold cheaper for holders of foreign currencies, while benchmark treasury yields were also lower for the day.
Additionally, US business activity contracted for a fifth straight month in November, with a measure of new orders dropping to its lowest level in 2-1/2 years as higher interest rates slowed demand.
In other metals, silver rose 0.8% to $21.25 per ounce, platinum fell 0.9% to $982.08 while palladium gained 0.7% to $1,873.44.