Gold reverses recent gains as Fed minutes posit more rate hikes
Investing.com-- Gold prices steadied on Thursday after falling in the prior session as the minutes of the Federal Reserve’s June meeting showed that policymakers supported more rate hikes, presenting a dour outlook for metal markets.
Wednesday’s losses saw gold wipe out most of a recent recovery, as the yellow metal struggled to rise from a three-month low hit in June.
Despite worsening economic conditions, investors have largely pivoted to the dollar as a preferred safe haven, amid growing expectations that the Fed will keep raising interest rates in the coming months.
Spot gold rose 0.1% to $1,917.58 an ounce, while gold futures fell 0.2% to $1,924.15 an ounce by 20:13 ET (00:13 GMT). Both instruments lost between 0.4% and 0.6% on Wednesday.
The minutes of the Fed’s June meeting showed that nearly all members of the central bank supported more interest rate hikes this year, citing stubborn inflation and unforeseen strength in the labor market.
The Fed had kept rates on hold in June, but had forecast an at least 50 basis point (bps) hike in rates this year. Rising interest rates bode poorly for non-yielding assets such as gold, given that they push up the opportunity cost of holding said assets.
Wednesday’s losses saw spot gold pull back from the $1,925 to $1,935 an ounce range, which analysts had said pegged as a support level for bullion. The yellow metal is now back to testing the $1,900 support level.
The Fed minutes saw traders ramp up expectations for a rate hike later in July, with markets now pricing in a 90.5% chance that the Fed will raise rates by 25 bps during a late-July meeting.
Focus is now on key U.S. nonfarm payrolls data due on Friday, for more cues on the labor market. The reading is likely to
Read more on investing.com
