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Gold futures rose Tuesday as investors assessed the outlook for interest rates ahead of next week’s meeting of Federal Reserve policy makers.
Price action
-
Gold for August delivery
GC00,
+0.15% GCQ23,
+0.15%
rose $5, or 0.3%, to $1,979.30 an ounce on Comex. -
July silver
SIN23,
+0.08%
gained 10, or 0.4%, to trade at $23.735 an ounce. -
July platinum
PLN23,
-0.34%
rose 0.5% to $1.042 an ounce, while September palladium
PAU23,
-0.13%
gained 1% to $1.424 an ounce. -
July copper
HGN23,
-0.40%
declined 0.3% to $3.7585 a pound.
Market drivers
Gold gained ground on Monday, lifted by a weaker-than-expected U.S. services index reading from the Institute for Supply Management, which saw traders further ratchet down expectations for an interest rate hike when the Federal Reserve meets next week.
Fed-funds futures traders have priced in a probability of less than 20% for a quarter percentage point rate hike in June, down from nearly 67% a week ago, but they still see a better than 60% chance that rates will rise by the end of the Fed’s July meeting.
More clear direction from the Fed following the June 13-14 meeting could set the tone for the precious metal, said Thu Lan Nguyen, analyst at Commerzbank, in a note.
“The prospect of rising rates will presumably weigh on the gold price until the meeting, in other words. However, a more pronounced and lasting correction is then on the cards after the Fed’s interest rate decision — assuming our experts are right — because the market’s positioning would then turn out to have been too hawkish,” Nguyen said.
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