Gold prices remained steady and hovered above the key $2,400 level on Wednesday, as investors awaited minutes from the Federal Reserve’s latest policy meeting for fresh signals on the timing of U.S. interest rate cuts.
Spot gold held its ground at $2,415.35 per ounce, as of 0345 GMT. Bullion hit a record high of $2,449.89 on Monday. U.S. gold futures were down 0.3% at $2,419.00.
According to Kelvin Wong, a senior market analyst for Asia Pacific at OANDA, one of the factors supporting gold is fiat currency debasement undertaken by the U.S. and developed nations due to rising budget deficits.
“There’s a potential that stimulus fiscal policy will play a higher role in stimulating these countries, and if this takes shape, the confidence of the individual country currency will be eroded,” Wong stated.
The minutes of the Fed’s May policy meeting, due at 1800 GMT, are eagerly awaited by traders who are currently pricing in a 64% chance of a rate cut by September.
Recent data suggested that U.S. inflation resumed its downward trend, but Fed policymakers said on Tuesday that the central bank should wait several more months to ensure inflation is back on track to its 2% target before cutting interest rates.
Lower interest rates and geopolitical uncertainty make bullion a favorable investment.
Tim Waterer, chief market analyst at KCM Trade, said that while gold has been solidifying above the $2,400 level ahead of a potentially looser interest rate environment later in the year, a pullback in the dollar or bond yields, or an increase in safe-haven demand may be required for it to hit record highs.
Spot silver fell 0.8% to $31.71 after hitting an over 11-year high on Monday. Wong commented that the silver price is more momentum-driven, and the break out of a major resistance level is more of a catch-up play given resilient gold prices.
Platinum edged 0.1% higher to $1,047.76, while palladium dropped 0.7% to $1,018.85.