Due to light trading on Tuesday and a U.S. holiday, gold prices remained unchanged as investors awaited the U.S. Federal Reserve’s minutes from its June meeting on Wednesday for additional information on the direction of future interest rate increases.
By 0241 GMT, spot gold was unchanged at $1,921.39 per ounce, while U.S. gold futures were unchanged at $1,929.10.
A US holiday may result in low trading volume.
“Right now, the headwinds for gold are expectations of a further 50 bps tightening, more liquidity withdrawal, and rates remaining relatively elevated for some time after the Terminal value has been reached,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.
According to CME’s Fedwatch tool, investors predict that rates will rise by 25 basis points in July, pushing them into the 5.25%–5.50% range, before cuts start to appear in March in 2024. High interest rates deter investment in gold that doesn’t yield.
The dollar index didn’t change. [USD/]
According to data released on Monday, U.S. manufacturing further declined in June, reaching its lowest level since May 2020. Despite this, pricing pressures continued to decline since supply chain bottlenecks have significantly alleviated and higher borrowing rates have stifled demand.
Additionally, the release of the minutes from the June 13–14 FOMC meeting will be closely watched by the markets.
Prior to a potential decline lower, gold prices could rise to $1,940, but “the rates background remains a significant drag,” Frappell warned.
Masato Kanda, Japan’s top financial diplomat, said authorities were in close communication with American and other foreign agencies as a result of the yen’s past week decline to a close to eight-month low versus the dollar.
During the Asian trading day, attention would also be paid to the Reserve Bank of Australia’s (RBA) policy decision.
Spot silver increased by 0.1% to $22.91 per ounce, platinum increased by 0.6% to $912.15, and palladium increased by 2% to $1,253.95 per ounce.