Gold eases as markets await Fed minutes for direction
- Spot gold fell 0.6% to $4,138.32 per ounce
Gold prices eased as investors awaited the Fed's June meeting minutes for monetary policy direction, with recent events influencing interest rate hike expectations.
- Fed's June meeting minutes and monetary policy direction.
- Impact of US jobs data and ceasefire on rate hike expectations.
- Hong Kong's new gold clearing system and futures trading.
Gold prices eased on Tuesday, trading below a two-week high, with investors awaiting the US Federal Reserve’s June meeting minutes for insight into new Chair Kevin Warsh’s monetary policy direction.
Spot gold fell 0.6% to $4,138.32 per ounce by 0232 GMT, while U.S. gold futures for August delivery eased 0.4% to $4,149.90.
“Gold price action looks like a little bit of a continuation of last week, some basing out, forming a support level, obviously waiting for a little bit of direction from the Fed minutes to get a bit more sense around what the Fed’s thinking is on the short term interest rate policy,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.
The Federal Open Market Committee’s June 16-17 meeting minutes will be released on Wednesday.
Warsh’s first meeting as chair removed references to what sort of rate adjustments the Fed might make, arguing that it can make a central bank less nimble in responding to new economic developments.
Fed Governor Christopher Waller on Monday, however, offered a contrast, saying it can be a “valuable tool” that speeds the impact of monetary policy under the right circumstances.
Gold has retreated more than 25% from record highs reached earlier this year, as the US-Israeli war with Iran stoked inflation concerns, boosted the dollar and reinforced expectations of interest rate hikes.
However, bullion hit a two-week high on Monday as a ceasefire deal eased some of those inflation concerns, while last week’s weaker-than-expected US jobs data prompted markets to dial back near-term interest rate-hike expectations.
Traders now see about a 56% chance of a rate increase in September, down from more than 60% before the data, according to the CME FedWatch tool.
Lower interest rates make non-yielding bullion more attractive for investors.
Meanwhile, Hong Kong launched a central clearing system for gold on Tuesday and also revived gold futures trading as it seeks to become a regional reserve hub for the precious metal.
Elsewhere, spot silver slipped 1% to $61.48 per ounce, platinum eased 0.1% to $1,629.46, while palladium rose 0.4% to $1,272.85.