Will smaller rate hikes boost the appeal of gold?

“Gold steadied as investors await Federal Reserve minutes due for release later Wednesday for fresh clues on how the path of monetary tightening could impact the precious
Metal.

Bullion has been under pressure throughout the year as the US central bank hiked rates, boosting bond yields and the dollar. This month gold has recouped some losses as lower-than-
expected inflation data stoked bets on less aggressive tightening.

Smaller rate hikes could boost the appeal of non-interest-bearing gold, which tends to have a negative correlation with bond yields. The metal snapped a four-day losing streak in the
previous session as the dollar weakened.

Traders will parse the minutes from the Fed’s last meeting later on Wednesday to gauge how unified officials are over a higher peak for interest rates. Chair Jerome Powell told
reporters earlier in the month that rates would probably have to go higher than the FOMC’s quarterly projections in September had indicated, but also mooted the prospect of a slowdown in hikes.

Some Fed officials agree that interest rates could stay higher for longer, and it’s “a scenario that may not be positive for metal markets next year,” Avtar Sandu, senior manager of commodities at Phillip Nova, said in a note.

Spot gold edged lower to $1,738.66 an ounce as of 12:16 p.m. in London after adding 0.1% on Tuesday. The Bloomberg Dollar Spot Index was steady after declining 0.5% in the previous session. Silver and palladium gained, while platinum was steady.”