The gold market exhibited relative stability as traders adopted a cautious stance, awaiting the Federal Reserve’s monetary policy update and rate decisions from other central banks scheduled for later in the week.
On the New York Comex, the most-active gold futures contract for December settled at $1,953.70 per ounce, showing minimal movement with a gain of just 30 cents for the day.
Meanwhile, the spot price of gold stood at $1,932.09 at 15:49 ET (19:49 GMT). Spot gold, which is determined by real-time trades in physical bullion and is closely monitored by certain traders, saw a marginal decline of $1.65, or 0.1%, during the day.
The December gold futures contract on New York’s Comex showed slightly more activity, closing at $1,946.20 per ounce, marking a modest rise of $13.30, or 0.7%, for the day. Over the course of the week, the benchmark gold futures contract inched up by $3.50, or 0.2%.
Ed Moya, an analyst at the online trading platform OANDA, commented on the current sentiment within the gold market, stating, “Gold traders are stuck in a wait-and-see mode as Central Bank-a-Palooza will deliver a make-or-break moment for bullion.” He referred to the upcoming rate decisions from the Federal Reserve, Bank of England, Bank of Japan, and People’s Bank of China.
He further noted, “The 10-year Treasury yield is hovering right at the August highs, potentially poised to set new cycle highs. The focus for gold traders will start with the Fed, but then quickly shift to the BOE and BOJ policy decisions.
The outcome of these central bank decisions will be closely watched, and Moya emphasized that, “If optimism grows that most of the advanced world is done raising rates, that would be good news for gold.” He also highlighted that gold might attract safe-haven flows if concerns about economic “hard landings” arise.
Central Bank Rate Decisions on the Horizon
Global financial markets are undergoing an adjustment in response to a revised outlook for interest rate hikes. This adjustment follows the European Central Bank’s decision to raise rates to a record high of 4%, while signaling that it might be the last hike for the foreseeable future.
The Federal Reserve, on the other hand, is not expected to raise rates during its meeting on September 20, especially following 11 rate hikes that collectively raised the base rate from just 0.25% in February 2022.
However, market participants will closely scrutinize Chairman Jerome Powell’s remarks during the news conference for insights into the Fed’s stance for the remainder of the year, with two more policy meetings scheduled for November and December.
While a Fed rate hike appears unlikely at this juncture, investors in the U.S. dollar are taking a cautious approach, while others are capitalizing on the greenback’s eight-week rally by booking profits.
In August, U.S. consumer prices experienced a second consecutive monthly increase, pushing year-on-year growth to 3.7% from 3.2% in July. High gasoline prices, which accounted for more than half of the increase, were primarily responsible for this uptick. This development may place renewed pressure on inflation-focused policymakers at the Federal Reserve.
The central bank maintains its commitment to achieving a maximum inflation rate of 2% per year and has pledged to utilize further rate hikes if necessary to attain this goal.