Gold prices moved lower on Wednesday as the US dollar strengthened, with investors awaiting minutes from the Federal Reserve’s September meeting for additional information on the direction of monetary policy.
At 08:40 GMT, spot gold declined 0.9% to $4,126.02 an ounce, while gold futures were down 0.8% at $4,151.90 an ounce.
The US Dollar Index rose 0.4% to 102.26. A stronger US currency can make dollar-denominated gold more expensive for buyers using other currencies.
Fed Minutes Could Provide Further Rate Guidance
The Federal Reserve is due to release minutes from its September meeting, when policymakers increased interest rates for the first time since 2023.
The central bank’s projections indicated that additional rate increases could follow before the end of the year as policymakers respond to inflation remaining above the Fed’s 2% target.
Expectations for another increase at the Fed’s next meeting have since moderated. Several Fed officials have indicated less urgency for an October increase, while recent employment figures were weaker than expected.
The direction of interest rates remains relevant for gold because higher borrowing costs can increase the opportunity cost of holding assets that do not generate interest or other income.
Central Banks Remain Net Gold Buyers
Purchases by central banks have continued to support gold demand despite uncertainty surrounding the outlook for interest rates, according to ING analysts.
World Gold Council figures cited by ING showed central banks purchased a net 39 tonnes of gold in August.
That brought net purchases since the beginning of the year to 170 tonnes, according to the data.
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