Gold at one-week low as dollar firms before Fed minutes release

Bengaluru — Gold prices slipped to their lowest levels in a week on Wednesday as the dollar firmed, while investors looked ahead to the release of minutes from the Federal Reserve’s latest policy meeting and US jobs data for clarity on any interest rate cuts.

Spot gold was down 0.3% to $2,053.10 an ounce at 10.21am GMT. US gold futures were down 0.5% at $2,062.20 at ounce.

“Gold is holding steady as markets still grapple with the odds surrounding Fed rate cuts this year,” said Han Tan, chief market analyst at Exinity Group.

“Spot gold should retain its upside bias as long as the Fed rate cuts narrative can remain intact. However, the precious metal may be forced into unwinding recent gains if the Fed isn’t able to press ahead with the policy pivot as anticipated for 2024.”

Traders are cautious ahead of the release of minutes from the US central bank’s December policy meeting, due at 7pm GMT on Wednesday. Investors are also keenly awaiting a slew of US economic data this week, including nonfarm payrolls report on Friday.

Futures markets see a 70% chance of a 25 basis points rate cut at the March meeting, according to CME’s FedWatch Tool.

“We note that despite the Fed’s capitulation on forward guidance on 13 December, there remains a large gap between the market’s expectations of aggressive rate cuts and the Fed’s most recent ‘dot plot’ projection,” said Mike Ingram, Market Analyst at Kinesis Money.

“The minutes of the FOMC’s December meeting, expected later today, may shed further light on the Fed’s current thinking.”

Markets are also keeping a close eye on the Middle East after Israel killed Hamas deputy leader Saleh al-Arouri in a drone strike in Lebanon’s capital Beirut on Tuesday.

Spot silver fell 1.1% to $23.3827 an ounce, hitting its lowest since December 13, 2023. Platinum was down 0.9% at $973.24 and palladium fell 0.6% to $1,074.25 per ounce.