Gold futures edged lower Wednesday, stuck in a tight trading range as investors await further clues on the Federal Reserve’s interest rate path.
Price action
- Gold for August delivery GC00, -0.43% GCQ23, -0.44% fell $4.50, or 0.2%, to $1,977 an ounce on Comex after posting back-to-back session gains.
- July silver SIN23, 0.51% added 9.5 cents, or 0.4%, to $23.765 an ounce.
- July platinum PLN23, -0.26% rose 0.5% to $1,043.70 an ounce, while September palladium PAU23, -0.94% tacked on 0.2% to $1,414.50 an ounce.
- July copper HGN23, -0.13% rose 0.4% to $3.784 a pound.
Market drivers
“In the past week, gold prices basically remained within a trading range of about 2% from the lower to higher end of the trading range,” said Peter Cardillo, chief market economist at Spartan Capital, in a note to clients.
“The fact that the debt ceiling crisis was resolved without a default did indeed deflate prices somewhat. However, the intermediate short-term prices will likely remain locked in the $1,950 -$2,000 range as the market eyes the next Fed move,” he wrote.
The Federal Reserve is expected to hold its policy interest rate steady when policy makers meet next week. Fed-funds futures traders have priced in just a 22.9% probability of a quarter percentage point rate rise on June 14, but see a 65% chance rates will have risen by a quarter or half a percentage point at its July 26 meeting.
The question is whether the Fed is “going to stick to its guns or try to shoot down inflation further,” said Naeem Aslam, chief investment officer at Zaye Capital Markets, in emailed commentary. “The dollar index is certainly suggesting that there is a large possibility for this, and the strength in the dollar index is keeping old traders somewhat worried.”
Overall, however, gold’s price action remains positive this week, he said. Gold futures trade around 0.4% higher for the week.
Still, the price level that puts the bulls on the higher ground is $2,000, and gold currently trades below this key mark, said Aslam. “This means that there is some hallucination among gold traders who think that the odds are stacked in their favour.”