Gold Reduces Losses as Fed Minutes Confirm Expectations – Reuters

Gold Prices Stabilize After Fed Meeting Minutes

By Ashitha Shivaprasad

Gold prices experienced a slight recovery on Wednesday after the release of minutes from a recent Federal Reserve meeting indicated that the central bank is likely to implement a half-point interest rate increase during its upcoming June and July sessions.

As of 4:15 p.m. ET, gold decreased by 0.7% to $1,853.80 per ounce, having dropped as much as 1.3% earlier in the day to $1,842.49. The U.S. gold market also settled down approximately 1% to $1,846.3.

During the May 3-4 policy meeting, all members of the Federal Reserve expressed support for a half-point rate increase to address inflation concerns that could escalate without intervention, according to the meeting minutes.

The price of gold began to recover following the release of these minutes; however, it remained lower overall, weighed down by a stronger dollar throughout the day.

"While the Fed minutes were generally in line with what the market expected, the Fed emphasized that a 50 basis point increase would likely be suitable for the upcoming meetings," noted Suki Cooper, an analyst at Standard Chartered. "Market attention is expected to remain focused on inflation data and any signs that cost pressures are easing."

Although gold is traditionally viewed as a safeguard against inflation, rising interest rates tend to diminish its attractiveness as they increase bond yields and consequently raise the opportunity cost of holding non-yielding bullion.

In related news, European Central Bank President Christine Lagarde secured significant support for her plan to move interest rates out of negative territory this summer.

Spot silver dropped 0.5% to $21.99 per ounce, while platinum fell 0.6% to $948.95. Palladium, on the other hand, saw a slight rise of 0.1% to $2,008.22.

Commerzbank analysts commented that "platinum and palladium are being restrained by ongoing challenges in the automotive sector, which is dampening demand for these precious metals."