Gold prices stable ahead of US Fed minutes on Wednesday

By:
on Feb 20, 2024
Updated: Feb 21, 2024
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  • Investors are anticipating clues regarding the timing of potential interest rate adjustments.
  • January FOMC meeting minutes are scheduled to release on Wednesday.
  • U.S. gold futures saw a modest increase of 0.3%, reaching $2,029.10 per ounce.

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Gold prices exhibited resilience on Tuesday, maintaining stability in the face of a strengthening dollar and heightened Treasury yields.

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Investors remained poised for insights from the latest U.S. Federal Reserve policy meeting minutes, eagerly anticipating clues regarding the timing of potential interest rate adjustments.

Meanwhile, U.S. gold futures saw a modest increase of 0.3%, reaching $2,029.10 per ounce.

The dollar index experienced a marginal uptick of 0.1%, coupled with benchmark 10-year Treasury notes nearing 4% levels in yield.

These developments rendered dollar-denominated gold less attractive to international investors.

Analyst says technical factors main focus

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City Index senior analyst Matt Simpson noted subdued volatility levels across markets amid the extended U.S. weekend and a dearth of impactful news.

Expectations for meaningful insights from the upcoming Federal Open Market Committee (FOMC) minutes were tempered, given the Fed’s vocal stance and the meeting predating recent inflation data releases.

Consequently, gold markets may continue to be primarily influenced by technical factors in the short term.

US Fed minutes on Wednesday

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Scheduled for release on Wednesday, the January FOMC meeting minutes hold potential significance for market sentiment and gold pricing dynamics.

Despite progress on U.S. inflation, Fed Bank of San Francisco President Mary Daly emphasized the ongoing need for stability in prices, indicating further policy considerations.

Another Fed official cautioned against prolonged delays in rate adjustments.

Last week’s data revealing higher-than-anticipated U.S. consumer and producer prices tempered expectations for a March rate cut, with market sentiment now leaning towards a 75% probability of a cut in June, according to the CME Fed Watch Tool.

Lower interest rates typically reduce the opportunity cost of holding non-interest-bearing assets like gold.

Spot platinum declined by 0.6% to $893.16 per ounce, palladium decreased by 0.8% to $946.41, and silver retreated by 0.4% to $22.93 per ounce.

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