Gold Falls on Improved Risk Appetite, Fed Minutes In Focus

Gold prices traded in the red on Tuesday after gaining almost 2% in the previous session as investors’ risk appetite steadily returns while they await more hints at the Federal Reserve’s stance on monetary policy.

Spot gold fell 0.08% to $1,859.03 per ounce, having posted a more than one-week high earlier. US gold futures also dropped by 0.18% to $1,872.85.

Spot gold climbed 1.6% on Monday, marking its largest single-day rise in five months, as traders sought safe-haven assets due to the ongoing war between Israel and the Palestinian militant group Hamas.

While profit-taking and investors’ improving appetite for riskier investments weigh on the yellow metal, head of commodity strategies Bart Melek said the Israel-Hamas conflict is curbing the losses.

Market analyst Fawad Razaqzada estimated the next level of possible resistance for gold at around $1,885 and $1,900 afterward.

Other precious metals were mixed, with silver shedding 0.02% to $21.84 per ounce, platinum adding 1.03% to $889.50 per ounce, and palladium advancing 0.81% to $1,179.07 per ounce.

Federal Reserve Minutes In Focus

Markets now turn their attention to the minutes from the Federal Reserve’s monetary policy meeting in September, set to be released on Wednesday, and the US consumer inflation data to be published on Thursday.

Gold prices may edge lower if the country’s consumer price index (CPI) grows above forecast, especially the core consumer inflation, as it would signal prolonged higher interest rates.

The yellow metal is often less attractive in times of surging interest rates as it lacks the ability to yield any interest income.

High-ranking Fed officials suggested that increasing yields on long-term US Treasury bonds may deter the central bank from additional rate hikes.

Minneapolis Fed President Neil Kashkari said raising interest rates may not be necessary to curb inflation as a selloff in the bond market could ease the rise despite robust growth in labor and wages.

Atlanta Fed President Raphael Bostic echoed the same sentiment, stating that no further increases in short-term policy rates are necessary due to the US monetary policy being limiting enough at the moment.