Gold futures settled lower Wednesday for the first time in four sessions, then recovered some lost ground in electronic trading.
Minutes from the Federal Reserve’s September meeting, released after gold futures settled, showed some policy makers questioning the need for an interest-rate hike in December.
In electronic trading December gold GCZ7, +0.52% was at $1,292.20 an ounce, up from the Comex settlement of $1,288.90 an ounce. Prices had fallen $4.90, or 0.4% for the session. The exchange-traded SPDR Gold Trust GLD, +0.32% was down less than 0.1%.
“The Fed minutes confirmed what several Fed officials had been hinting at since the meeting—that the consensus support for a December rate hike isn’t strong or completely committed,” Brien Lundin, editor of Gold Newsletter, told MarketWatch. “This added bit of doubt as to whether there’ll be a December hike and helped gold reverse” part of the day’s decline.
A commitment to raising rates could have provided a lift to the U.S. dollar and place downward pressure on assets linked to the currency. Higher rates and a stronger buck tend to be bearish for gold, making the commodity less appealing to investors compared with richer-yielding assets.
After the Fed minutes, the ICE U.S. Dollar Index DXY, -0.10% traded about 0.3% lower.
“Regardless of whether the Fed does raise rates in December, I believe the December meeting will serve as a launching pad for a new gold rally, in much the same fashion as the last two such hikes in 2015 and 2016 marked big turnarounds in gold,” said Lundin. “If the Fed raises rates, shorts will cover their bets and collect their winnings as we saw the last two years, releasing selling pressure from the gold market.”
And “if the Fed doesn’t raise rates, that will be a powerful dovish signal to the markets that should take gold even higher,” he said.
On Wednesday, Chicago Fed President Charles Evans, a voting member of the FOMC, said a December interest-rate hike wasn’t a done deal, according to a report by The Wall Street Journal. Evans was giving a talk in Zurich. Wall Street is pricing in a nearly 87% chance of a hike in December, according to CME Group data.
But also on Wednesday, Kansas City Fed President Esther George said that waiting for inflation to hit the central bank’s 2% target before further interest rate increases would be a mistake.
Meanwhile, geopolitical risks, including worries about escalating tensions between North Korea and the U.S. and concerns about instability in the European Union, centered on unrest of Catalonia, have served as a boost to haven metals. Gold futures trade about 12% higher year to date.
Among other metals traded on Comex, silver for December delivery SIZ7, +0.48% lost 7.4 cents, or 0.4%, to end at $17.133 an ounce, after a four-session climb—its longest since a five-day rise ended Aug. 14. The iShares Silver Trust SLV, +0.62% edged up by less than 0.1%.
December copper HGZ7, -0.26% rose 1.1% to $3.096 a pound. January platinumPLF8, +0.38% shed 0.4% to $933.20 an ounce, while December palladiumPAZ7, +0.07% settled at $958.95 an ounce, up 2.7%.