Gold prices were slightly changed on Wednesday as markets process several weeks of building expectation over a possible rate hike ahead of the Federal Reserve’s September meeting minutes due later in the day.

US gold futures for the December delivery shed 0.1 percent to 1.292.03 an ounce, while spot gold added 0.1 percent to 1,289.92 per ounce. It reached the 1,300 level in September.

A Hong Kong-based trader said that some money is being lost ahead of the Fed minutes and that it was just a bit of risk on. Moreover, the precious metal was feeling the weight of the dollar’s condition in Asia.

The trader estimated that the gold prices would likely be in the range of 1,280 to 1,300 for the moment.

Analyst Wang Tao said that spot gold may revisit support at 1,281 an ounce before making a comeback towards the resistance of 1,299.

Other precious metals, such as silver was up by 0.1 percent to 17.14 per ounce, after hitting a three-week high in the earlier session. Silver futures for the December contract were down by 0.2 percent to 17.16.

Platinum gained 0.5 percent to 935.85 an ounce, while palladium slipped 0.2 percent to 929.55 per ounce.

Fed Minutes Expectations


Investors will be keeping a close eye on the minutes of the Federal Open Market Committee’s (FOMC) September meeting later in the day as they look for clues with regards to another rate hike in December.

It is widely expected that Fed will raised its interest rates two months from now, for the third time this year.

Gold is extremely sensitive to rate hikes since these can boost the opportunity cost of having non-yielding bullion, while improving the dollar.

The trader said that 1,300 is a very psychological level for the yellow metal and they need to hit that to see some more buying. They will just have to wait for the FOMC minutes and come across some profit taking for now.

The minutes is expected to suggest another rate hike, with investors seeing about an 80 percent chance that it will happen at the Fed meeting in December. Possibly another interesting part will be what the US central bank will say concerning financial stability.

Based on the forecasts presented at Fed’s two-day meeting in September, 12 of the 16 FOMC participants were in favor for one more rate increase this year.

However, Federal Reserve Bank of Dallas President Robert Kaplan, who votes this year on Fed policy, said that he would like to look for more signs of rising inflation before considering another interest rate hike.   

Economist Sam Bullard stated that the ongoing inflation matter and its effect to future policy action is probably at the top of the list.

Fed lowered in September its expectations for inflation this year and next, and pushed back to 2019, its median estimate for when inflation will reach 2 percent a year.

The minutes might also include Fed’s view that past experience suggests that natural disasters are unlikely to significantly adjust the course of the national economy over the medium term.

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