Gold Prices Show Modest Increase Ahead of Release of Fed Minutes.

Introduction

Investors eagerly awaited the release of the Federal Reserve’s June meeting minutes as gold prices held steady on Wednesday, showing modest overnight gains. In contrast, concerns over a potential resurgence of the U.S.-China trade war led to a slight decline in copper prices. Despite briefly dipping below the crucial support level of $1,900 per ounce last week, the price of gold has experienced a minor recovery over the past three days. One of the main drivers behind this upward trend is the concern surrounding a possible increase in U.S. interest rates.

Gold Prices Maintain Stability

As of 20:26 ET (00:26 GMT), spot gold remained unchanged at $1,926.38 per ounce, while gold futures also showed no significant movement, standing at $1,933.85 per ounce.

Fed Meeting Minutes Signal Upcoming Rate Increase

The focus of the market is now firmly fixed on the minutes of the Federal Reserve’s meeting in June, as they hold the potential to provide crucial hints regarding the direction of American interest rates. Although the central bank maintained interest rates at their current level last month, it had indicated the likelihood of at least two additional increases within the year, citing the persistently high level of inflation. This stance was further reaffirmed by Fed Chair Jerome Powell through a series of speeches and testimonies over the past two weeks.

Expectations of a Rate Increase in July

Current market sentiment suggests an 88% probability of the central bank raising interest rates by 25 basis points later this month. Despite recent data indicating a decrease in overall U.S. inflation, core inflation remains stubbornly high and continues to surpass the Fed’s desired range.

Pressure Mounts on Gold

While the anticipation of a future U.S. recession has driven some demand for gold as a safe haven, prevailing trends indicate that gold prices may face increasing pressure in the months to come. Analysts at IG have pointed out that if spot gold manages to surpass the resistance level situated between $1,925 and $1,935 per ounce, they will adopt a positive bias towards the precious metal.

Conclusion

As the market eagerly awaits the release of the Federal Reserve’s meeting minutes, gold prices have remained stable with modest overnight gains.