Gold prices were little changed on Tuesday as investors waited for the release of minutes from the Federal Reserve’s latest policy meeting.
By 08:30 ET, spot gold was almost flat at $4,165.58 an ounce. Gold futures rose 0.2% to $4,176.21 an ounce.
Stronger Dollar Weighs on Gold Sentiment
A firmer U.S. dollar limited demand for bullion.
The dollar was supported by a rise in the benchmark 10-year U.S. Treasury yield, which reached a two-week high. A stronger dollar can make gold more expensive for buyers using other currencies.
Analysts at ING said foreign exchange volatility may remain limited before the release of the FOMC minutes. They also noted that the U.S. economic calendar was light on Tuesday.
Fed Minutes Take Center Stage
Markets are now focused on the minutes from the Fed’s June meeting.
At that meeting, the central bank kept interest rates unchanged in a range of 3.50% to 3.75%. However, several Fed officials signaled that another rate hike could still happen this year.
This has kept investors cautious, especially in markets sensitive to interest rate expectations.
Kevin Warsh Signals Less Forward Guidance
New Fed Chair Kevin Warsh has said he does not want the central bank to provide strong forward guidance on interest rates.
However, he also noted last week that inflation risks have eased.
This mixed message has added uncertainty for investors trying to predict the Fed’s next move.
Gold Outlook Depends on Rate Expectations
Gold remains highly sensitive to changes in interest rate expectations.
Higher interest rates can reduce the appeal of gold because the metal does not pay interest or dividends.
At the same time, softer U.S. payrolls data last week and lower oil prices after the interim U.S.-Iran ceasefire have complicated the Fed’s policy outlook.
Traders Reduce September Rate Hike Bets
According to the CME FedWatch Tool, traders now see around a 56% chance of a rate hike as soon as September.
That is down from 60% before the latest employment figures were released.
For now, gold traders are waiting to see whether the Fed minutes confirm a more hawkish policy stance or point to a more cautious approach.
