Gold futures declined Wednesday, settling at their lowest in more than a week, as investors awaited further clues on the Federal Reserve’s interest rate path.
Price action
-
Gold for August delivery
GC00,
-0.10% GCQ23,
-0.10%
fell $23.10, or 1.2%, to settle at $1,958.40 an ounce on Comex after posting back-to-back session gains. Prices settled at their lowest since May 30, FactSet data show. -
July silver
SIN23,
+0.44%
lost 14 cents, or 0.6%, to $23.53 an ounce. -
July platinum
PLN23,
-0.03%
declined by 1.4% to $1,024.60 an ounce, while September palladium
PAU23,
-1.49%
shed 1.7% to $1,387.90 an ounce. -
July copper
HGN23,
+0.24%
edged down by 0.3% to $3.76 a pound.
Market drivers
“In the past week, gold prices basically remained within a trading range of about 2% from the lower to higher end of the trading range,” said Peter Cardillo, chief market economist at Spartan Capital, in a note to clients.
“The fact that the debt ceiling crisis was resolved without a default did indeed deflate prices somewhat. However, the intermediate short-term prices will likely remain locked in the $1,950 -$2,000 range as the market eyes the next Fed move,” he wrote.
The Federal Reserve is expected to hold its policy interest rate steady when policy makers meet next week. Fed-funds futures traders have priced in just a 22.9% probability of a quarter percentage point rate rise on June 14, but see a 65% chance rates will have risen by a quarter or half a percentage point at its July 26 meeting.
The question is whether the Fed is “going to stick to its guns or try to shoot down inflation further,” said Naeem Aslam, chief investment officer at Zaye Capital Markets, in emailed commentary. “The dollar index is certainly suggesting that there is a large possibility for this, and the strength in the dollar index is keeping old traders somewhat worried.”
Following the loss on Wednesday, gold futures turned negative for the week, down less than 0.1% week to date.
Still, the price level that puts the bulls on the higher ground is $2,000, and gold currently trades below this key mark, said Aslam. “This means that there is some hallucination among gold traders who think that the odds are stacked in their favour.”
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