Gold prices saw an increase on Wednesday as investors awaited minutes of the Federal Reserve‘s last policy meeting for more insight into when the central bank will start cutting interest rates.
In the UAE, gold prices saw an AED0.75 increase with 24-carat gold inching up to AED282.75 per gram, while 22-carat gold rose to AED261.75. Twenty-one-carat gold was at AED253.50 while 18-carat gold reached AED217.25.
Globally, spot gold saw a 0.18 percent increase to $2,334.65 per ounce, as of 5:14 GMT. Meanwhile, U.S. gold futures gained 0.45 percent to $2,344.25.
Interest rate cut caution
Gold prices rose as investors awaited the release of the Federal Reserve meeting minutes at 18:00 GMT. Fed Chair Jerome Powell said on Tuesday the U.S. was back on a “disinflationary path”. However, policymakers were looking for more data before cutting interest rates to verify that recent weaker inflation readings provided an accurate gauge of the economy’s health. Investors are also eying the ADP employment and weekly jobless claims data due today and the nonfarm payrolls (NFP) report due on Friday.
Traders have priced in a 67 percent chance of a Fed interest rate cut in September, according to CME FedWatch Tool. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
Weaker central bank demand and slower retail demand in China are still risk factors that could impact the performance of gold prices.
In its half-year report, the World Gold Council stated: “There’s a clear path for gold to outperform from here, likely fuelled by Western flows. Conversely, in the event that central bank demand drops drastically, rates remain high for longer, and Asian investor sentiment flips, we could see a pullback in the second half.”
Read: Saudi Arabia issues $1.17 billion in sovereign sukuk across three tranches in June
Other precious metals
As gold prices increased, spot silver rose 0.70 percent to $29.72 and platinum gained 0.74 percent to $998.30. However, palladium declined 0.64 percent to $1,015.29.
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