Gold prices were subdued on Wednesday as investors waited for minutes from the Federal Reserve’s latest policy meeting to get a sense of the U.S. central bank’s interest rate trajectory.
Spot gold held steady at $2,619.75 an ounce at 0255 GMT, after hitting a two-week low in the previous session. Prices reached a record high of $2,685.42 on September 26.
U.S. gold futures rose 0.1% to $2,638.20.
The dollar index saw a sharp rise last week, reaching its highest level in seven weeks. A stronger dollar makes bullion less attractive to holders of other currencies. [USD/]
“The price of gold appears to be undergoing a much-needed retracement to the downside. But I suspect buyers are on the lookout and eager to grab a bargain – so I don’t expect a significant sell-off,” he said. said Matt Simpson, senior analyst at City Index.
Minutes from the Fed’s September meeting are expected at 18:00 GMT. Traders are also closely watching the Consumer Price Index (CPI) report on Thursday and the Producer Price Index (PPI) on Friday.
“Gold prices could get a nice boost if the CPI is weak, but for it to reach a new high this year, US data in general needs to be worse,” added Mr. Simpson.
The CME’s FedWatch tool shows markets no longer expect a 50 basis point cut next month, following last week’s strong jobs report. The probability of a 25 basis point reduction is now 89%.
Susan Collins, president of the Boston Fed, said on Tuesday that weakening inflationary trends made it likely that the US central bank would implement further interest rate cuts.
Zero-yielding bullion tends to thrive in a low interest rate environment.
Gold exchange-traded funds recorded a fifth straight month of inflows in September as funds listed in North America increased their holdings, according to the World Gold Council.
Spot silver lost 0.3% to $30.62. Platinum rose 0.4% to $953.90 and palladium fell 0.3% to $1,018.04.
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