Key Takeaways
- Gold prices declined by 1.1% to $4,119.01 per ounce.
- US dollar index rose 0.5%, making gold more expensive for non-US investors.
- Investors await Federal Reserve’s September meeting minutes for further rate hike signals.
Gold prices fell by 1.1% to $4,119.01 per ounce by 1127 GMT on Wednesday, as the US dollar strengthened, making the precious metal more expensive for holders of other currencies.
US gold futures for December delivery declined by 1% to $4,145.50, reflecting the broader market sentiment.
The US dollar index, which measures the greenback against a basket of six major currencies, rose 0.5%, indicating increased demand for the US currency.
ActivTrades director and CEO Ricardo Evangelista stated, 'There is also an element of caution ahead of the release of the latest Federal Open Market Committee minutes later today. Until there is greater clarity on that (support for rate hikes) front, there is probably some reluctance to take larger positions in gold.'
Following softer US jobs data, markets now largely expect the Federal Reserve to stay pat in October, but are still pricing in an 86% chance of a hike in December, according to the CME’s FedWatch tool.
Kansas City Fed President Jeff Schmid and San Francisco Fed President Mary Daly both emphasized the need for higher interest rates to combat inflation, though the persistence of inflationary pressures remains uncertain.
Higher interest rates reduce the attractiveness of non-yielding gold, which is seen as a hedge against inflation.
International Monetary Fund Managing Director Kristalina Georgieva warned that the global economy faces risks from persistently high energy prices, record public debt, and risks from the AI investment boom.
Separately, delegates at the London Bullion Market Association’s annual conference in Italy forecast that gold could reach $5,013 an ounce over the next 12 months.
China’s central bank stepped up its gold purchases in September, extending its buying streak to a 23rd consecutive month, official data showed.
There is also an element of caution ahead of the release of the latest Federal Open Market Committee minutes later today.
Ricardo Evangelista, ActivTrades director and CEO
