Gold futures finished higher Tuesday for a second straight session as investors assessed the outlook for interest rates ahead of next week’s meeting of Federal Reserve policy makers.
Price action
-
Gold for August delivery
GC00,
-1.05% GCQ23,
-1.05%
rose $7.20, or 0.4%, to settle at $1,981.50 an ounce on Comex, after trading between a low of $1,970.30 and high of $1,982.90, FactSet data show. -
July silver
SIN23,
-0.49%
added 4 cents, or nearly 0.2%, to settle at $23.67 an ounce. -
July platinum
PLN23,
-1.32%
rose 0.2% to $1,038.70 an ounce, while September palladium
PAU23,
-1.72%
added 0.1% to $1,411.80 an ounce. -
July copper
HGN23,
-0.44%
ended little changed at $3.77 a pound.
Market drivers
Investors await to see “what will happen with the recent stock market rally and if the disinflation process will allow the Fed to skip a rate hike next week,” said Edward Moya, senior market analyst at OANDA, in a market update.
“Demand for safe-havens have somewhat eased up and traders are waiting to see if the next market risk triggers a de-risking moment,” he said.
Gold gained ground on Monday, lifted by a weaker-than-expected U.S. services index reading from the Institute for Supply Management, which saw traders further ratchet down expectations for an interest rate hike when the Federal Reserve meets next week.
Fed-funds futures traders have priced in a probability of less than 20% for a quarter percentage point rate hike in June, down from nearly 67% a week ago, but they still see a better than 60% chance that rates will rise by the end of the Fed’s July meeting.
More clear direction from the Fed following the June 13-14 meeting could set the tone for the precious metal, said Thu Lan Nguyen, analyst at Commerzbank, in a note.
“The prospect of rising rates will presumably weigh on the gold price until the meeting, in other words. However, a more pronounced and lasting correction is then on the cards after the Fed’s interest rate decision — assuming our experts are right — because the market’s positioning would then turn out to have been too hawkish,” Nguyen said.
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