Gold prices regained some composure on Wednesday, snapping four consecutive sessions of losses as uncertainty over the trajectory of US monetary policy kept investors on edge ahead of the release of minutes from the Federal Reserve’s October meeting.
Gold futures climbed 0.7% to $4,096.20 per ounce, while spot gold gained 2% to $4,095.40 an ounce at the time of writing.
“Gold has somewhat had its momentum thwarted by the stronger USD and doubts about when the next Fed rate cut may arrive,” KCM Trade chief market analyst Tim Waterer said.
“However, a bout of risk aversion in the market has kept gold in the frame for investors as a safety play, which has limited the slide.”
The Fed cut interest rates by 25 basis points last month, but chair Jay Powell has signalled caution over the prospect of further easing this year, citing limited incoming data. Markets are now assigning nearly a 49% probability to another cut at the central bank’s 9-10 December meeting, according to the CME Group’s FedWatch tool.
Gold, which offers no yield, typically benefits from lower interest rates and periods of economic uncertainty, both of which tend to reduce the relative attractiveness of interest-bearing assets.
Gold prices hovered above the $4,100 mark on Wednesday morning as investors awaited a vote in the US House of Representatives on a deal to reopen the federal government, a move that could restore the flow of economic data and provide clearer guidance on the Federal Reserve’s next steps with interest rates.
Gold futures gained 0.5% to $4,134.30 per ounce, while spot gold edged down 0.1% to $4,132.08 an ounce at the time of writing.
“Everyone is awaiting more clarity on the government shutdown and when the data is coming out of the US again,” said Giovanni Staunovo, an analyst at UBS. “It’s probably some stability before prices keep going up … we are still in an uptrend when it comes to the gold prices. Nothing from the structural side has completely changed.”
Source: uk.finance
