Gold prices stabilized on Wednesday after a short-lived peak as the potential for the end of the rate hike cycle from the Federal Reserve kept the yellow metal steady.
Spot gold rose 0.10% to $2,000.36 per ounce, while December contract gold futures lost 0.03% to $2,002.20.
Futures had climbed as high as $2,009.80 per ounce in the previous session before slightly retreating following minutes from the US central bank’s November meeting.
A rally in gold prices seemed to have taken a breather as Fed minutes published on Tuesday provided no hint on possible rate cuts anytime soon.
Markets were certain that the Fed would stop with its interest rate hikes, but the minutes had raised some uncertainty over when the central bank plans to start reducing rates.
Traders are pricing in the Fed to begin trimming rates in March 2024.
On industrial metals, copper prices declined from two-month highs on Wednesday as traders prepare for additional economic signals from China, the metal’s top importer.
Copper futures for December delivery were down 0.86% to $3.77 per pound.
Gold’s Outlook Uncertain Due to Fed’s Hawkish Stance
Gold has performed strongly in recent sessions, as the US added fewer jobs and inflation slowed in October, reinforcing the possibility that the Fed would bring interest rate hikes to a halt.
Still, the yellow metal’s future performance remained uncertain, considering the central bank may decide to extend the period for higher interest rates. The Fed has suggested keeping rates above 5% until at least the end of next year.
Such an outlook works against gold’s favor and has weighed on the yellow metal over the past year as the central bank carried out its most aggressive rate hike move.
Higher interest rates are also expected to keep pressure on gold in the coming months or until the Fed hints at easing monetary policy.
Further impeding gold’s surge was the US dollar discontinuing its series of losses on Wednesday, slightly bouncing back from a near three-month low.
Nonetheless, the yellow metal has gained almost 10% so far in 2023 due to safe-haven demand as the global economy faltered.
