Gold is trading barely above $1,830 an ounce, close to its lowest level this year as the markets await the release of the minutes of the Federal Open Market Committee later today.
Gold has suffered since expectations on how much longer the Fed will continue to increase its benchmark interest rates turned more hawkish. Today’s publication of the rationale behind the 25 basis point hike at the start of this month as well as the committee’s outlook for future moves will therefore have a significant impact on gold’s short-term fortunes.
Having raced up close to $1,950 an ounce in January based on a future scenario of the Fed soon pausing its hikes, gold suffered a sharp reality check when a range of US central bankers reiterated the need for more hikes to well and truly curb inflation. With gold now trading over $100 an ounce lower than it was at the start of February, investors will be hoping that the minutes point to a Fed that is likelier to keep to 25 basis point increases going forward rather than a return to the 50 basis point hikes of 2022.
With the gold price now having largely priced in this readjusted outlook, it is unlikely that gold will fall much further when the minutes are released with a dovish interpretation providing scope for the price to recover a little of the ground the precious metal has lost so far this month.
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