Gold pared some losses on Wednesday after
minutes from a Federal Reserve meeting showed the pace of future
hikes would depend on incoming economic data, while the dollar
also added pressure on prices.
Spot gold fell 0.5% to $1,766.29 per ounce by 2:36
p.m. ET (1936 GMT). U.S. gold futures settled down 0.7%
Minutes from the July Federal Open Market Committee
(FOMC)meeting stated that it could take longer than anticipated
for inflation to dissipate.
The pace of future hikes would depend, the minutes said, on
incoming economic data, as well as Fed assessments of how the
economy was adapting to the higher rates already approved.
“The gold market viewed the Fed minutes with a dovish tilt
and prices edged higher,” Standard Chartered analyst Suki Cooper
Gold pared losses after the minutes were in, yet stayed
lower, having been down for most of the day on a firmer dollar.
“We expect the Fed to hike by 50 bps in September and focus
will shift to the August CPI data and September non-farm
payrolls data to determine whether inflation is indeed slowing
and labor markets softening,” Cooper added.
Even though gold is seen as a hedge against inflation, rate
hikes raise the opportunity cost of holding zero-yield bullion.
“We still see a Fed that is committed to fighting the
inflationary pressures with upcoming rate hikes. However, it is
the pace of those upcoming rate hikes that is potentially in
question,” said David Meger, director of metals trading at High
Recent hawkish remarks from Fed officials have weighed on
non-interest bearing bullion, and Fed funds future traders
priced in a 57.5% chance of a 50-bps hike in September after the
Spot silver fell 1.3% to $19.86 per ounce, platinum
was down nearly 1% to $925.89, while palladium
fell 0.77 % to $2,137.71.
(Reporting by Ashitha Shivaprasad, Seher Dareen and Kavya
Guduru in Bengaluru; Editing by Devika Syamnath and Shailesh