The price of gold experienced a decline in the last hour of trading on Wednesday following the release of the December meeting minutes by the US Federal Reserve (Fed). Contrary to expectations, the minutes did not contain any dovish hints, leading to a resurgence of the Greenback. The US Dollar reached a new 11-day high before retracing slightly. As of the latest update, XAU/USD is trading at $2040 per troy ounce, marking a decrease of more than 0.90%.
The Fed’s minutes indicated that most officials view interest rates as likely or near their peak. However, some expressed uncertainty about how long restrictive policies would need to be maintained. Despite noting progress on inflation, concerns about elevated core services were raised. Some participants suggested keeping rates at current levels for a more extended period than initially anticipated.
In response to the news, gold prices plummeted to a new two-week low at approximately $2030.30 before a minor rebound to $2036, still reflecting losses exceeding 1%. Simultaneously, the US 10-year Treasury bond yield dipped by two basis points but maintained its position around the 3.90% threshold. The US Dollar, as gauged by the US Dollar Index (DXY), gained 1.11%, settling at 102.45.
Earlier economic data, including the Institute for Supply Management (ISM) report indicating manufacturing activity remaining at a recessionary level for 14 consecutive months, and the JOLTS report from the US Department of Labor suggesting a cooling down in the job market, did not significantly impact the gold market.
Despite these economic indicators, expectations for rate cuts by the Fed for December 2024 remained unchanged, with market participants betting on a reduction of more than 150 basis points.
Looking ahead in the week, the US economic calendar will include the ADP Employment Change report, Initial Jobless Claims, and Flash PMIs by S&P Global, all scheduled for Thursday. Subsequently, attention among gold traders will shift towards the December Nonfarm Payrolls report.
