Gold is slightly off Tuesday’s new highs this morning as traders await a rate decision by the U.S. Federal Reserve and as trade tensions with China lessen.
There’s just a 20.8% chance that an interest-rate cut will happen at today’s meeting of the Federal Open Market Committee, according to the CME FedWatch Tool. At this time, the higher chance of a cut is at the next meeting. The odds of a rate cut at the July 31st meeting, per the FedWatch tool, is 86.3%. For firmer indications of what might happen, investors will look to the release of the minutes from the meeting and Chairman Powell’s press conference this afternoon at 2 pm EDT for signals on when a cut might come and how Fed policymakers view the economy.
On Tuesday, gold futures settled at their highest level in 14 months after European Central Bank President Mario Draghi seemed to set the stage for lower interest rates. Rate cuts are typically considered bullish for gold. President Trump took the ECB chief to task for the comments in a subsequent tweet, saying Draghi’s remarks caused the euro to drop against the dollar and were “making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others.”
The Bank of England and Bank of Japan are scheduled to announce rate decisions on Thursday.
Trump said he’ll have an “extended meeting” with China’s President Xi Jingping next week on the sidelines of the Group of 20 meeting in Osaka, Japan. Indications that the two superpowers may be taking steps to resolve a trade war lessen gold’s luster as a safe-haven asset.
Comex Gold futures for the August contract at the time of this report are at $1,347.50, that’s a tad down from yesterday, when the contract rose 0.6% to settle at $1350.70.
Silver futures are currently down a tad for the August contract at $14.955 an ounce after settling up 1.1% Tuesday.
Spot platinum, which is sensitive to the growth of the Chinese automotive industry, was slightly lower early Wednesday after climbing 1.1% on Tuesday. Spot palladium is trading higher, bouncing either side of $1,500 an ounce after gaining 1.6% on Tuesday. It continues having a good year, increasing $234.99/oz. or 18.59% since the beginning of 2019.
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