Gold Recovers from Pressure; FOMC Could Shift Momentum
Gold prices strengthened again during Wednesday's trading (August 19) after facing sharp downward pressure the previous day. Spot gold rose approximately 0.5% to US$4,356.29 per troy ounce, while US gold futures hovered around US$4,410.30. The rebound occurred as the US dollar weakened and global bond yields began to retreat from multi-decade highs.
On Tuesday, gold had slumped by about 2% after long-term borrowing costs in the US, Germany, and Japan surged sharply due to inflation concerns. This rise in yields made non-interest-bearing gold relatively less attractive compared to bonds.
Pressure on gold began to ease on Wednesday as the bond sell-off lost momentum. The US dollar also weakened, allowing bullion to regain investor interest. A weaker greenback made gold relatively cheaper for holders of other currencies.
Market focus has now shifted to the minutes of the July FOMC meeting, scheduled for release at 18:00 GMT. Investors will be scrutinizing the divergence of views among Federal Reserve officials and whether inflationary pressures remain strong enough to sustain the possibility of interest rate hikes.
According to the CME FedWatch Tool, the market currently estimates a roughly 67% probability that the Fed will hold interest rates steady at its next meeting. Expectations for rate hikes have continued to diminish following signs of weakness in US economic data, providing additional support for gold prices.
Newsmaker Analysis: Gold's current rebound remains heavily dependent on the trajectory of the dollar, Treasury yields, and the tone of the FOMC minutes. If the minutes reveal that the Fed is increasingly inclined to maintain current rates, gold could extend its recovery and retest the US$4,380–US$4,400 range. Conversely, if a hawkish tone resurfaces and yields rise again, selling pressure could push gold back down to test the nearest support levels. (arl)
Source: Newsmaker.id
