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Metals Stocks: Gold futures move lower, with Fed minutes on deck

Gold futures moved lower on Wednesday as investors awaited minutes from the Federal Reserve’s late-July meeting, looking for clues about the timetable for the central bank’s rollback of crisis-era accommodations.

Ahead of the Fed minutes, investors will also hear from St. Louis Federal Reserve Bank President James Bullard, who will be interviewed by MarketWatch at noon.
Bullard isn’t currently a voting member of the Federal Open Market Committee, but will be in 2022.

Precious metal “remains on standby” ahead of the Fed minutes, said Lukman Otunuga, manager of market analysis at FXTM.

“Investors are expected to closely scrutinize the minutes for any clues on when the Fed might start tapering its bond purchases,” he told MarketWatch. Still, “given how no earth-shattering revelations are expected, the focus will remain on the Jackson Hole Symposium in late August.”

“In the meantime, the precious metal remains buoyed by unease over the spread of the delta variant, concerns around the strength of China’s recovery and geopolitical tensions in Afghanistan,” he said.

December gold
GCZ21,
-0.11%

GC00,
-0.11%

 fell $1.30, or nearly 0.1%, at $1,786.50 an ounce following a 0.1% decline on Tuesday. Prices for the most-active contract settled Monday at their highest since early August.

Silver for September delivery SI00 SIU21 was down 16.4 cents or 0.7%, at $23.50 an ounce, following a nearly 0.6% decline on Tuesday.

Minutes from the Federal Open Market Committee’s July meeting are due to be published at 2 p.m. Eastern Time, a half hour after gold futures settle for the session. There will be in greater focus on the minutes amid news reports earlier this week that indicated policy makers were nearing an agreement to begin scaling back monthly purchases of $120 billion in Treasurys and mortgage-backed securities by November, with The Wall Street Journal reporting some policy makers were looking to end purchases by mid-2022.

A formal announcement on tapering is expected at either next week’s symposium on monetary policy in Jackson Hole, Wyoming, or the Fed’s September meeting.

Read: Fed’s Powell uncertain about what the rise of COVID delta variant means for the economy

“It’s clear that most members think the Fed reached its inflation target of ‘inflation moderately above 2 percent for some time’,” said Marshall Gittler, head of investment research at BDSwiss, in a note Wednesday. “The deciding factor then is the labor market.”

Gittler said it appears that both Fed doves and hawks “want to see the autumn employment data, particularly around school reopenings, before beginning the process of tapering.”

Given that the Fed won’t have the September employment report available at its Sept. 22 meeting, “the best it could do then would be to put the market at notice that a decision is likely to be imminent at upcoming meetings, he said. He believes the Nov. 3rd meeting would be the earliest the Fed could announce the start of tapering.

Meanwhile, some strategists said that gold was gaining some traction higher due to investors spotting recent bullish momentum crystallizing in price chart patterns. Gold futures are up 0.5% so far this week, FactSet data show.

“The gold market bulls have the slight overall near-term technical advantage and that’s inviting some chart-based buying from the shorter-term traders.” wrote Jim Wyckoff, senior analyst at Kitco.com.

Precious metals briefly took a leg higher after a reading of U.S. housing starts for July declined by 7% after increasing by 3.5% in the prior month, according to data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. Meanwhile, building permits rose 2.6% in July, compared with a decline of 5.3% in June.

Gold and silver have enjoyed buying amid uncertainty about the spread of the delta variant of the coronavirus. Weak data also has offered some support for recent buying, including a Tuesday report that revealed that Americans cut spending at retail stores in July, with retail sales down 1.1% or more than the 0.3% decline forecast by economists polled by The Wall Street Journal.

Among other metals, September copper
HGU21,
-1.59%

shed 1.6% to $4.14 a pound. October platinum
PLV21,
-0.10%

was down less than 0.1% at $993.40 an ounce, while September palladium
PAU21,
-1.63%

lost 1.6% to $2,456 an ounce.

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