· Gold prices held steady on Wednesday after recovering to above the key $1,500 an ounce level in the previous session, with investors waiting for the minutes of the Federal Reserve’s July meeting for possible clues on further U.S. interest rate cuts.
Spot gold slipped 0.2% to $1,503.25 per ounce by 0344 GMT.
U.S. gold futures were down 0.2% at $1,513.30 an ounce.
· Minutes from the Federal Open Market Committee’s most recent meeting in July, when the U.S. central bank cut rates for the first time since the 2008 financial crisis, are due on Wednesday.
· “The minutes are going to set up a foundation of what to expect, and then Jackson Hole will provide clarity as to whether the Fed is finally coming to the party with potential monetary policy support,” said IG Markets analyst Kyle Rodda.
· Traders are also waiting for the U.S. central bank’s Jackson Hole seminar later this week and a Group of Seven summit this weekend for clues on what additional steps policymakers may take to boost economic growth.
Futures are fully priced for a quarter-point cut in rates next month, and over 100 basis points of easing by the end of next year.
· Signalling a possible escalation in the trade war, U.S. President Donald Trump said on Tuesday he had to confront China over trade even if it caused short-term harm to the U.S. economy because Beijing had been cheating Washington for decades.
· Trump’s remarks came hours before his government announced approval of a sale of fighter jets to Taiwan, a move sure to draw Beijing’s ire and further dim prospects for a quick trade deal.
· Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.21% to 845.17 tonnes on Tuesday.
Spot gold may retest a support at $1,497 per ounce, a break below which could cause a fall to $1,480, according to Reuters technical analyst Wang Tao.
· The dollar index, which measures the greenback’s value against a basket of six major currencies, was flat after drifting away from a three-week high hit on Monday.
· FX Street | Gold wobbles near $1,500 with all eyes on FOMC minutes
Although fewer catalysts suggest receding trade/political tension, not to forget firm bearish bets for the Fed, Gold prices fail to extend the latest recovery as investors remain cautious ahead of the key events. The bullion takes the rounds to $1,503 by the press time before Wednesday’s Europe session.
Technical Analysis
A sustained break below 10-day exponential moving average (EMA) level of $1,500 becomes necessary for prices to revisit 23.6% Fibonacci retracement of April-August upside, at $1,471, in absence of which Friday’s high around $1528 and the monthly top surrounding $1535 can keep buyers happy.
· What goes up must come down before rallying again, according to one market expert, who sees a lot of choppy trading before $1,600 is hit.
Further momentum in gold cannot be ruled with the overall macro environment working in favor of the yellow metal, Rhona O'Connell, head of market analysis for EMEA and Asia regions at INTL FCStone, told Kitco News on Tuesday.
But, if prices rush higher, gold is likely to see a sharp selloff. “People are talking $1,600. It may happen, but it is not going to happen in a straight line. If we do get $1,600, we probably would have seen $1,470first," O'Connell said. "At some point, when the price fails to deliver further momentum, you will start seeing some profit-taking. To be up that much in such a short period of time, you would normally have expected a bigger pullback. We hadn't had one.”
· Elsewhere, silver fell 0.5% to $17.04 per ounce, while platinum was too down 0.5% to $844.60.
· Palladium fell 0.3% to $1,486.80 per ounce.
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