Gold prices were subdued on Wednesday as investors strapped in for minutes from the Federal Reserve’s latest policy meeting for insights into the U.S. central bank’s interest rate trajectory.
Spot gold held its ground at $2,619.75 per ounce by 02:55 GMT, after hitting a two-week low in the previous session. Prices scaled a record high of $2,685.42 on Sept. 26.
U.S. gold futures edged 0.1% higher to $2,638.20.
The dollar index witnessed a sharp rally to a seven-week high last week. A stronger dollar makes bullion less attractive to other currency holders.
“Gold prices seem to be seeing a much-needed retracement lower. But I suspect buyers are lurking and keen to snap up a bargain – so I’m not expecting a significant sell-off,” said Matt Simpson, senior analyst at City Index.
Minutes from the Fed’s September policy meeting are due at 18:00 GMT. Traders are also keeping a keen eye on the U.S. Consumer Price Index (CPI) report on Thursday and the Producer Price Index (PPI) data on Friday.
“Gold prices could get a nice bump if CPI comes in soft, but whether it can reach a new high this year requires U.S. data in general to underperform,” Simpson added.
The CME FedWatch tool shows that markets no longer expect a 50-basis-point cut next month, following last week’s strong jobs report. They now see an 89% chance for a 25-basis-point reduction.
Boston Fed President Susan Collins said on Tuesday that weakening inflation trends make it likely the U.S. central bank can implement further interest rate cuts.
Zero-yield bullion tends to thrive in a low interest rate environment.
Gold exchange-traded funds registered a fifth consecutive month of inflows in September as North America-listed funds added to their holdings, the World Gold Council said.
Spot silver lost 0.3% to $30.62. Platinum rose 0.4% to $953.90 and palladium fell 0.3% to $1,018.04.