Gold flat as markets await Fed minutes

GOLD prices were flat in early Asian hours on Tuesday (Oct 8) as market participants awaited minutes of the US Federal Reserve’s last meeting and more economic data for further clarity on policy easing this year.

Spot gold was little changed at US$2,643.68 per ounce, as at 0013 GMT. US gold futures fell 0.1 per cent to US$2,662.90.

Markets are awaiting minutes of the Fed’s last policy meeting due on Wednesday, followed by the US Consumer Price Index report on Thursday and the Producer Price Index data on Friday. A slew of Fed officials are also speaking this week.

After Friday’s stronger-than-expected jobs report, traders pulled back from bets for a 50-basis-point (bp) rate cut in November. They now see an 86 per cent chance of a 25 bp cut and a 14 per cent chance that the Fed would not cut rates at all, according to the CME’s FedWatch tool.

The report showed that US job gains increased by the most in six months in September and the unemployment rate fell to 4.1 per cent, pointing to a resilient economy.

St Louis Fed president Alberto Musalem said he supports more rate cuts as the economy moves forward on a healthy path, while noting that it is appropriate for the central bank to be cautious and not overdo easing monetary policy.

Gold is considered a hedge against geopolitical uncertainties and tends to thrive in a low interest rate environment.

In the Middle East, Hezbollah fired rockets at Israel’s third-largest city, Haifa, and Israel looked poised to expand its offensive into Lebanon on Monday, one-year after the devastating Hamas attack on Israel that sparked the Gaza war.

China’s central bank held back on buying gold for its reserves for a fifth straight month in September, data showed on Monday, mainly due to a surge in prices for the yellow metal.

Spot silver lost 0.2 per cent to US$31.66 per ounce. Platinum rose 0.4 per cent to US$976.10 and palladium gained 0.4 per cent to US$1,028.00. REUTERS