Gold prices rose in the European market on Wednesday, attempting to recover from a three-week low recorded earlier in Asian trading, supported by bargain hunting at lower levels.
However, the recovery remains capped by strength in the US dollar, which is being bought as the preferred safe-haven investment ahead of the release of the Federal Reserve’s latest meeting minutes.
The Price
•Spot gold rose 0.35% to $3,327.65, up from the session’s opening level of $3,315.84, after touching an intraday low of $3,311.58, the weakest level since August 1.
•At Tuesday’s settlement, gold lost 0.5%, marking its second straight daily decline under pressure from a stronger US dollar and higher US bond yields.
The US Dollar
The dollar index rose 0.15% on Wednesday, extending gains for a third consecutive session and reaching a one-week high of 98.44, reflecting continued strength in the US currency against a basket of major and minor counterparts.
Markets now turn their attention to Fed Chair Jerome Powell’s speech on Friday at Jackson Hole, where traders are looking for any pushback against market pricing of a rate cut next month.
US Interest Rates
•According to CME’s FedWatch Tool, the probability of a 25 basis-point rate cut in September is currently priced at 83%, with a 17% chance of no change.
•For October, probabilities are priced at 92% for a 25 basis-point cut and 8% for no change.
•Investors are closely watching the Fed minutes due later today and comments from policymakers to reassess these expectations, alongside Powell’s upcoming remarks at Jackson Hole.
Gold Outlook
Kelvin Wong, market analyst at OANDA for Asia-Pacific, said the stronger US dollar and improved risk appetite following recent geopolitical developments are weighing on gold, with markets awaiting Powell’s remarks at Jackson Hole for further direction.
SPDR Gold Trust
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 3.16 metric tons on Tuesday, bringing the total down to 962.21 metric tons. This compares with 965.37 metric tons, the highest level since September 9, 2022.
