Gold Holds Near $4,160 Ahead of Fed Minutes
Gold prices were little changed on Wednesday as investors shifted their attention to the Federal Reserve’s September meeting minutes for fresh clues about the future path of U.S. monetary policy.
Spot gold was around $4,159.62 per ounce by 0038 GMT, while U.S. gold futures for December delivery were steady at approximately $4,187.30.
The market is closely watching the Fed minutes because expectations for interest-rate policy remain one of the most important drivers of gold prices.
Fed minutes become the main focus
The minutes of the September Federal Open Market Committee meeting are scheduled for release later on Wednesday.
San Francisco Fed President Mary Daly said she supported September’s rate increase because of rising inflation risks. However, she said the need for further increases would depend largely on whether the shocks that have been pushing inflation higher begin to fade or continue to build.
Kansas City Fed President Jeff Schmid took a more hawkish position, saying the Fed still needs to raise its policy rate further to bring inflation down, even though higher long-term yields are already weighing on some parts of the economy.
October rate-hike expectations decline
Recent softer economic data have reduced expectations for a Federal Reserve rate increase in October. However, traders still see a strong probability of another increase in December, with expectations around 85%.
Interest rates are important for gold because the precious metal does not generate interest income. When interest rates and bond yields are high, investors can have a greater incentive to hold yield-generating assets instead of gold.
At the same time, lower expectations for immediate monetary tightening can support gold by reducing pressure from higher real yields.
Gold remains supported by broader uncertainty
Gold is also receiving attention from investors because of continuing geopolitical and fiscal uncertainty.
Delegates at the London Bullion Market Association’s annual gathering in Sorrento, Italy, forecast that gold could reach around $5,013 per troy ounce over the next 12 months. That figure represents the expectations of industry participants surveyed at the event rather than a Reuters forecast.
Other precious metals were mixed. Spot silver fell 0.6% to $61.32 an ounce, platinum rose 0.4% to $1,707.65, while palladium declined 0.1% to $1,170.75.
