Gold futures edged higher on Wednesday as traders await minutes of the U.S. Federal Reserve’s April meeting for clues on interest-rate policy. Most Fed officials most likely will remain cautiously optimistic. It is hard to imagine that Fed’s first hike in interest rates in what will be nine years would be announced at a non-press conference gathering, as most of the summer gatherings. Moreover, it is very doubtful that the Fed can hike interest rates in December, because financial markets are notoriously illiquid. The ongoing structural shift in bank balance sheets has only further fostered illiquidity concerns. For this reason, September 17 is the most likely meeting for a rate hike, if one will be announced this year at all. However, the key message from the April minutes should be that a rate hike is still very possible this year.
Gold for June delivery on Comex rose $2.10, or 0.2%, to $1,208.80 an ounce, while July silver gained 5.4 cents, or 0.3%, to $17.125 an ounce.
Gold on Monday rose to its highest level in more than three months, but gave back some of those gains on Tuesday. The yellow metal has been stuck in trading range between resistance at $1,225 an ounce and support at $1,180.
During that time, gold’s been buffeted by competing forces: rising bond yields, which are seen as a negative for the commodity, and a weaker dollar, which is seen as a positive. It is rare, however, to see the dollar and bond yields move in opposite directions for a prolonged period. The two factors are likely “to come into alignment sooner rather than later.
Meanwhile, traders will likely parse the release of the April minutes of the policy-setting Federal Open Market Committee. Economists said the subdued tone of the Fed’s policy statement following that April meeting means the minutes, which will offer a summary of the panel’s policy debate, could virtually eliminate any remaining expectations for a rate hike in June.