Gold Climbs Higher as All Eyes Fix on Fed Minutes

Gold prices recovered on Tuesday as everyone awaited the release of minutes of the U.S. Federal Reserve’s recent meeting.

The minutes is said to hold clues regarding the pace of the central bank’s interest rate hikes. The minutes of the latest Fed policy meeting will be released on Wednesday. The previous meeting was also when the Fed decided to keep interest rates unchanged.

Spot gold rose by 0.2 percent at $1,279.67 per ounce by 0439 GMT. This happened after the metal’s slip of around 1.4 percent on Monday. The fall was the biggest one-day percentage drop that happened since September 11 this year.

The U.S. gold futures for December delivery grew by 0.3 percent to $1,279.30.

”Given the fact that the December rate hike is almost a done deal, market watchers will look more closely at what is the Fed rhetoric for post December,” said analyst Barnabas Gan.

Higher interest rates are known to lift the dollar as well as drive bond yields higher. This put pressure on gold prices as it increases the opportunity cost of holding non-yielding bullion.

Fed Chair Janet Yellen announced on Monday that she will be leaving her seat on the Fed’s Board of Governors after Jerome Powell’s confirmation and once he’s been sworn in to replace her as the U.S. central bank head.

“The fact that Yellen has now confirmed to leave is adding a little bit of volatility as traders adjust their positions while they make sense of the implications of the incoming new Fed chairman Jerome Powell in terms of interest rate direction,” another analyst, Loh Mun Chun, pointed out.

Traders were also looking out for the geo-political front after North Korea was once again placed on a list of state sponsors of terrorism. The move was made by U.S. President Donald Trump on Monday.

Gan stated that, “It is very hard to predict as to what Trump is going to do... We are waiting to see how North Korea reacts and whether it escalates global tensions.”

According to an analyst, there is a possibility that spot gold could break support at $1,274 per ounce and slump towards its October 6 low of $1,260.16.

Silver gained 0.3 percent to $16.96 per ounce after it fell 2.3 percent on Monday, its biggest percentage fall listed since September 26.

Platinum rose 0.6 percent to $928.70 after losing almost 3 percent on Monday also, indicating its worst day since early May.

Palladium was up by 0.2 percent to $990.60 an ounce.

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