Gold prices faced a lackluster trading session on Wednesday as investors sought more guidance on interest rates from the Federal Reserve’s chairman, following a series of mixed messages from various U.S. central bank policymakers.
Spot gold remained virtually unchanged, standing at $1,968.11 per ounce as of 0247 GMT, having recently touched its lowest point since October 24 during Tuesday’s session. Simultaneously, U.S. gold futures displayed minimal change at $1,974.70.
Ilya Spivak, Head of Global Macro at Tastylive, pointed out that “the geopolitical risk premium is getting digested out, and as central banks turned away from rate hikes, it is ultimately pushing yields lower. So, there’s not much of driving catalysts for gold this week.”
The Federal Reserve has witnessed a series of mixed signals from its officials, further contributing to market uncertainty. Several Fed officials maintained a balanced tone in their assessments of the central bank’s next steps, emphasizing their focus on economic data and the impact of higher long-term bond yields.
Chicago Fed President Austan Goolsbee indicated that the central bank had made substantial progress in its efforts to curb inflation. In contrast, Fed Governor Michelle Bowman reiterated her view that the central bank would likely need to raise short-term rates once more.
All eyes are now on Federal Reserve Chair Jerome Powell, set to address the public on both Wednesday and Thursday. Market participants are eager to glean insights into the central bank’s stance.
Ilya Spivak predicted, “We’re likely to see a restatement of what Powell said about three weeks ago at the Economic Club of New York and at FOMC (Federal Open Market Committee) last week, which is that the Fed is going to hold rates at these levels, but the hikes are probably done.”
Futures are currently reflecting a roughly 15% likelihood of another rate hike by January. Simultaneously, there is a 20% probability of rate cuts potentially occurring as early as March, as indicated by the CME FedWatch tool.
Notably, lower interest rates tend to enhance the appeal of zero-yield assets such as gold.
In the broader precious metals market, spot silver experienced a 0.3% decline, reaching $22.55 per ounce. Platinum exhibited a marginal decrease of 0.1%, settling at $890.42. Meanwhile, palladium recorded a more significant drop, falling by 0.8% to $1,047.03, marking its lowest point since October 2018.
