Gold prices dropped on Wednesday as the
dollar firmed, while investors awaited minutes from the U.S.
Federal Reserve’s May policy meeting for cues on the magnitude
of the central bank’s upcoming interest rate hikes.
Spot gold was down 0.5% at $1,857.39 per ounce, as of
0636 GMT, after rising to its highest since May 9 of $1,869.49
on Tuesday. U.S. gold futures also dropped 0.5% to
The dollar index strengthened after hitting its
lowest level in a month in the previous session, making
greenback-priced bullion more expensive for buyers holding other
“Traders will be looking to the FOMC (Federal Open Market
Committee) minutes for policy hints beyond June and July, as
September rate hike expectations could be hugely pivotal for
gold prices,” said Stephen Innes, managing partner at SPI Asset
The FOMC is expected to release the minutes from its May 3–4
policy meeting at 1800 GMT later in the day.
However, “investors are struggling with how to assess the
landing path of inflation now that peak inflation is behind us.
The question for the market is how long it will take to
normalize, and that uncertainly is helping gold,” Innes said.
While gold is seen as an inflation hedge, higher short-term
U.S. interest rates raise the opportunity cost of holding
As the Federal Reserve amps up its fight against
40-year-high inflation with what is expected to be a string of
big interest-rate increases, a U.S. central banker injected a
note of caution, warning headlong rate hikes could create
“significant economic dislocation.”
Spot gold may stabilize around a support at $1,856 per ounce
and retest a resistance at $1,867, according to Reuters’
technical analyst Wang Tao.
Spot silver was down 0.6% at $21.95 per ounce,
platinum eased 0.7% to $947.49, while palladium
rose 0.5% to $2,015.99.
(Reporting by Bharat Govind Gautam in Bengaluru; Editing by
Sherry Jacob-Phillips and Rashmi Aich)