Gold slips as US dollar gains; investors await Fed minutes for rate clues

[BENGALURU] Gold prices slipped on Wednesday (Oct 7) as the US dollar strengthened, while investors awaited minutes from the US Federal Reserve’s September meeting for clues on whether policymakers remain inclined to raise rates further.

Spot gold fell 0.6 per cent to US$4,138.34 per ounce by 0451 GMT. US gold futures dropped 0.5 per cent to US$4,164.70.

The US Dollar Index rose 0.2 per cent, making greenback-priced metals costlier for investors holding other currencies.

Minutes of the latest Federal Open Market Committee meeting are due later in the day.

“The yellow metal is likely to remain relatively stable with a mild downside bias,” said Frank Walbaum, a market analyst at Naga.com.

“Minutes will clarify the Fed’s monetary policy and the degree of support among policymakers for further rate increases and could reshape upcoming hike odds.”

“Subsequent moves in long-term Treasury yields, the US dollar, or oil prices triggered by any Middle East developments would then amplify the directional impact [on gold],” Walbaum said.

Recent comments from Fed officials underscored the US central bank’s commitment to bringing inflation under control.

San Francisco Fed president Mary Daly said whether further rate hikes are needed depends largely on if the factors pushing up inflation fade or persist, while Kansas City Fed president Jeff Schmid said rates still need to rise further to bring inflation down.

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While recent soft economic data has dampened expectations of an October rate increase, traders still price in an 87 per cent chance of a hike by December.

In a high interest rate environment, investors tend to favour yield-generating assets over gold.

Separately, delegates attending the London Bullion Market Association’s annual conference in Sorrento, Italy, forecast that gold could reach US$5,013 an ounce over the next 12 months.

Elsewhere, US Vice-President JD Vance said in an exclusive interview with Reuters that Iran must make a “meaningful” reduction in its nuclear enrichment capacity to satisfy US demands and end the seven-month war.

Spot silver fell 1.5 per cent to US$60.79, platinum eased 0.3 per cent to US$1,697.45 and palladium lost 1 per cent to US$1,160.23. REUTERS