Gold prices experienced a third consecutive decline on Wednesday as investors sought clarity on the U.S. central bank’s stance on interest rates. Meanwhile, palladium reached a five-year low.
As of 3:01 p.m. ET (2001 GMT), spot gold saw a 1% decrease, settling at $1,947.89 per ounce—a significant daily drop not witnessed since October 2. U.S. gold futures concluded 0.8% lower at $1,957.8. Silver also faced a 0.5% dip, reaching $22.52 per ounce.
Daniel Ghali, a commodity strategist at TD Securities, emphasized the impact of economic data and potential actions by the U.S. central bank on gold trading, stating, “Gold will react based on whatever the data is showing.” Ghali further noted that without a notable deterioration in the data, it’s challenging to foresee a catalyst for further upside in gold.
On Tuesday, several Federal Reserve officials maintained a balanced tone on the central bank’s next decision, emphasizing their focus on additional economic data and the impact of higher long-term bond yields. Fed Chair Jerome Powell is scheduled to speak at 2:00 p.m. ET on Thursday.
Gold’s sensitivity to rising U.S. interest rates, which increase the opportunity cost of holding the non-yielding asset, remains a significant factor in its market dynamics. Phillip Streible, Chief Market Strategist at Blue Line Futures in Chicago, highlighted the diminishing risk premium gold gained from the Israel-Hamas conflict. He noted that an escalation in the conflict could provide momentum for gold.
While gold experienced a more than 7% gain in October due to safe-haven demand amid the Middle East conflict, palladium faced challenges. Palladium reached its lowest levels since 2018 at $1,007.73, marking a 0.5% decline to $1,050.06. Platinum also eased by 2.8%, settling at $866.31.
In the palladium market, Ghali explained, “Demand is evaporating at a pretty fast pace led by smaller production of internal combustion engines, and it is also being substituted with platinum in auto catalyst components.” Both metals play a crucial role in emissions-controlling devices in cars.
