Gold hardly changed as traders search for direction from Fed

Bengaluru — Gold struggled for momentum on Wednesday as investors looked for more clarity on interest rates from the Federal Reserve chief after mixed messages from a host of US central bank policymakers.

Spot gold was unchanged at $1,968.11/oz by 2.47am GMT after hitting its lowest since October 24 on Tuesday. US gold futures were little changed at $1,974.70.

“The geopolitical risk premium is getting digested out and as central banks turned away from rate hikes, it is ultimately pushing yields lower. So, there [are not many] driving catalysts for gold this week,” said Ilya Spivak, head of global macro at Tastylive.

A slew of Fed officials on Tuesday maintained a balanced tone on the central bank’s next decision, but noted they would focus on more economic data and the effect of higher long-term bond yields.

Chicago Fed president Austan Goolsbee said the central bank had made significant inroads in its battle to bring inflation down, while Fed governor Michelle Bowman repeated her view that the central bank was likely to need to raise short-term rates again.

Investors now look forward to comments from Fed chair Jerome Powell, who is set to speak on Wednesday and Thursday.

“We’re likely to see a restatement of what Powell said about three weeks ago at the Economic Club of New York, and at FOMC [Federal open market committee] last week, which is that the Fed is going to hold rates at these levels, but the hikes are probably done,” Spivak said.

Futures point to a chance of about 15% of another rate hike by January, but are pricing in a 20% chance that cuts could come as early as March, according to the CME FedWatch tool.

Lower interest rates boost the appeal of zero-yield bullion.

Elsewhere, spot silver fell 0.3% to $22.55/oz, while platinum eased 0.1% to $890.42. Palladium dropped 0.8% to $1,047.03, its lowest since October 2018.

Reuters