Gold prices experienced minor fluctuations in Asian trading on Wednesday, showing limited support from safe-haven demand following remarks by Federal Reserve officials that prompted uncertainty over expectations for interest rate adjustments.
The yellow metal did witness some safe-haven buying earlier this week amidst escalating tensions between Israel and Hamas, although ceasefire negotiations showed little progress. However, this demand was counterbalanced by renewed concerns about potentially higher U.S. interest rates and a strengthening dollar.
Spot gold edged up by 0.2% to reach $2,317.70 per ounce, while gold futures for June delivery remained steady at $2,325.40 per ounce as of 00:12 ET (04:12 GMT). Despite the modest increase, spot prices remained over $100 below the record high reached in late April.
Gold Faces Pressure Amidst Fed Rate Speculation
Gold prices encountered minimal support despite a recent dip in the dollar, as the greenback rebounded on Tuesday following statements from several Fed officials suggesting a likelihood of unchanged rates through 2024.
Minneapolis Fed President Neel Kashkari echoed this sentiment on Tuesday, prompting traders to reassess expectations for rate cuts this year. Although weak payroll data last week initially fueled expectations of a rate cut in September, Kashkari and his colleagues emphasized that persistent inflation remains a key consideration for the Fed.
The prospect of sustained high U.S. rates poses challenges for gold, as it increases the opportunity cost of holding the precious metal as an investment.
Mixed Performance in Precious Metals Market
Other precious metals exhibited mixed performance amid concerns about U.S. interest rates. Platinum futures remained steady at $988.35 per ounce, while silver futures rose by 0.3% to $27.635 per ounce.
