Gold prices edged lower on Wednesday as the dollar regained its footing after a period of decline, with investors shifting their focus to the upcoming minutes from the U.S. Federal Reserve's most recent policy meeting. The precious metal, which had surged to a record high earlier in the week, saw some profit-taking as traders awaited signals on the future of U.S. interest rates.
As of 9:43 a.m. ET, spot gold had dipped by 0.5% to $2,501.79 per ounce, down from a peak of $2,531.60 reached on Tuesday. U.S. gold futures similarly declined, falling 0.4% to $2,539.70 per ounce. The modest pullback came as the dollar stabilized against other major currencies, making gold slightly less attractive to holders of foreign currencies.
"We're just seeing a pause as there is some mild profit-taking pressure by the shorter-term futures traders with the market awaiting the FOMC minutes," commented Jim Wycoff, senior analyst at Kitco Metals. Wycoff noted that the recent rally in the stock market has also contributed to a bearish undertone in the gold market, as rising equity prices could limit gold's upside potential.
Investors are now keenly awaiting the minutes of the Federal Reserve's July policy meeting, scheduled for release later on Wednesday, as well as Fed Chair Jerome Powell's keynote speech at the upcoming Jackson Hole symposium on Friday. These events are expected to provide critical insights into the central bank's approach to managing inflation and interest rates in the coming months.
Recent economic data from the United States has shown a continued moderation in inflation, which has fueled speculation that the Fed might consider cutting interest rates as early as September. Lower interest rates tend to reduce the opportunity cost of holding non-yielding assets like gold, potentially providing a boost to the metal's price. However, some caution remains among Fed officials, with Fed Governor Michelle Bowman recently expressing concerns about persistent inflationary pressures.
"The risk of economic recession plus today's continued geopolitical violence is likely to strengthen investor demand for bullion alongside the record pace of purchases by Asian and other emerging market central banks," said Adrian Ash, director of research at BullionVault. Analysts at ANZ also projected that gold prices could hit fresh highs of $2,550 per ounce later this year.
Despite the recent pullback, gold has performed strongly in 2024, with prices up by more than 21.5% since the start of the year. The metal's resilience has been driven by a combination of global economic uncertainties, persistent inflationary concerns, and increased central bank purchases, particularly from emerging markets.
Meanwhile, other precious metals have also seen mixed movements. Spot silver fell by 0.5% to $29.29 per ounce, reflecting broader market caution. In contrast, platinum gained 2.3% to reach $967.90, and palladium rose by 3.4% to $957.25, indicating continued interest in these metals despite the fluctuations in gold prices.
As the week progresses, the market will be closely watching the Fed's minutes and Powell's address for further clarity on the direction of U.S. monetary policy. Any indications of a shift in the Fed's stance could have significant implications for gold and other precious metals, particularly as investors weigh the risks of economic recession and geopolitical instability.
Reuters and USA Today contributed to this report.
