Futures & Commodities

Gold dips as mixed Fed outlook put investors on edge

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Key Points
  • Spot gold fell 0.1% to $1,776.65 per ounce by 2:15 p.m. EDT (1815 GMT), reversing some gains from earlier in the session as the dollar recouped initial declines.
  • U.S. gold futures settled 0.4% lower at $1,776.70.
An Argor-Heraeus SA branded two hundred and fifty gram gold bar, center, sits in this arranged photograph at Solar Capital Gold Zrt. in Budapest, Hungary.
Akos Stiller | Bloomberg | Getty Images

Gold edged lower in choppy trading on Thursday, as mixed cues from U.S. Federal Reserve officials on the approach the central bank could take to withdraw stimulus kept investors wary.

Spot gold fell 0.1% to $1,776.65 per ounce by 2:15 p.m. EDT (1815 GMT), reversing some gains from earlier in the session as the dollar recouped initial declines.

U.S. gold futures settled 0.4% lower at $1,776.70.

A day after Fed Chair Jerome Powell said interest rates would not be raised too quickly and that inflation wouldn't be the only determinant of policy, two Fed officials said on Wednesday inflation may persist longer than anticipated, with one official predicting a rate hike in late 2022.

Alex Turro, senior market strategist at RJO Futures said concerns over potential rate hikes and tapering of asset purchases from the Fed were still weighing on sentiment in the gold market and should continue to do so, until the market gets more clarity on policy.

Turro added that higher yields were also a headwind for bullion prices.

Higher yields tend to increase the opportunity cost of holding non-yielding bullion.

TD Securities commodity strategist Daniel Ghali also said that physical gold purchases in top hubs India and China could remain weak in the near term, further pressuring the market.

Bullion investors also largely ignored data that showed a dip in initial claims for U.S state unemployment benefits and a 6.4% annualized increase in gross domestic product last quarter.

Silver gained 0.4% to $25.97 per ounce, while platinum rose 0.9% to $1,093.59. Palladium was up 1.2% at $2,644.94.

Higher automobile output once an ongoing chip shortage ends and solid economic growth resumes could drive prices of autocatalyst platinum higher over the next 12 months, UBS analyst Giovanni Staunovo said in a note, forecasting end-December prices at $1,250.