Gold prices found stability on Wednesday as a pullback in U.S. bond yields offset the pressure from a stronger dollar. Investors continued to seek more clarity regarding interest rates from the Federal Reserve, following a series of mixed comments from central bank officials.
Spot gold remained relatively flat at $1,968.64 per ounce as of 0126 GMT, after recently hitting its lowest point since October 24 during Tuesday’s trading session. Meanwhile, U.S. gold futures posted a modest 0.1% gain, reaching $1,975.20.
The U.S. dollar strengthened for the third consecutive session, advancing by 0.1% against major currency counterparts. This rise in the dollar made gold relatively more expensive for holders of other currencies.
Despite the dollar’s gains, benchmark 10-year U.S. Treasury yields hovered close to a five-week low reached the previous week.
Chicago Fed President Austan Goolsbee noted that the Federal Reserve has made substantial progress in its efforts to bring inflation down to its target of 2%. Attention now turns to how long the central bank will maintain rates at their current level if this progress continues.
Minneapolis Fed Bank President Neel Kashkari suggested that the central bank might need to take further action to achieve its 2% inflation goal, given the recent series of robust economic data.
In contrast, Fed Governor Michelle Bowman reiterated her view that the central bank would likely need to raise short-term rates again.
All eyes are now on comments from Federal Reserve Chair Jerome Powell, scheduled to speak on both Wednesday and Thursday. Investors are eagerly awaiting insights into the central bank’s outlook.
Futures are currently indicating a roughly 15% probability of another rate hike by January. Additionally, the futures market is pricing in a 22% chance that rate cuts could potentially materialize as early as March, as indicated by the CME FedWatch tool.
Lower interest rates continue to enhance the appeal of zero-yield assets like gold.
In the broader precious metals market, spot silver saw a 0.3% decline, trading at $22.56 per ounce, while platinum displayed a slight 0.3% decrease, settling at $888.60. Palladium remained relatively steady at $1,055.49, near its lowest level since 2018.
Investors will keep a close eye on upcoming economic data and events, including Germany’s HICP Final Year-on-Year data for October and France’s Reserve Assets Total for October.
Please note that all timestamps are provided in GMT.
