During Wednesday’s North American trading session, gold prices experienced a significant plunge, breaching below the critical $2,400 mark as traders opted to book profits in anticipation of the release of the latest Federal Reserve (Fed) Meeting Minutes. Market sentiment was further influenced by data indicating ongoing weakness in the United States housing market, coupled with Fed officials staying cautious following a busy start to the week.
The XAU/USD pair was observed trading at $2,392, marking a loss of more than 1% from its earlier high of $2,426. This decline coincided with a rise in US Treasury bond yields, driven by a hotter-than-expected inflation report from the UK, thereby exerting upward pressure on US yields. Meanwhile, US equities exhibited a mixed performance ahead of NVIDIA’s earnings report release, while the US dollar saw marginal gains.
Adding to the market dynamics, a report from The Wall Street Journal highlighted that gold rallied recently due to increased central bank buying. Data from the World Gold Council revealed that central banks in emerging markets have collectively added approximately 2,200 tons of gold since Q3 2022. The article suggested that this surge in buying activity could be attributed to Western sanctions on Russia following its invasion of Ukraine.
Despite the overall negative sentiment, US Existing Home Sales experienced a decline in April from 4.22 million to 4.14 million, indicating a contraction of -1.9%. However, Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), expressed optimism, stating, “Home prices reaching a record high for the month of April is very good news for homeowners.”
Following these developments, the Fed released its latest meeting minutes, revealing that “Various participants mentioned willingness to tighten policy further should risks to outlook materialize and make such action appropriate.” This statement underscores the central bank’s commitment to closely monitor economic conditions and adjust monetary policy accordingly to address emerging risks.
