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Gold Steadies as Dollar Trickles Lower Ahead of FOMC Minutes

Published 2018-02-21, 01:53 p/m
Updated 2018-02-21, 01:56 p/m
© Reuters.

© Reuters.

Investing.com – Gold prices remained steady after the dollar eased from highs as traders awaited the release of the Federal Reserve’s January meeting minutes for clues on future monetary policy action.

Gold futures for April delivery on the Comex division of the New York Mercantile Exchange rose by $0.40, or 0.03%, to $1,331.60 a troy ounce.

Gold prices steadied a day after suffering its biggest one-day slide in two-and-a-half months which followed a surge in yields and dollar.

The yellow metal was supported by somewhat dovish comments from Federal Reserve officials who suggested the Fed’s gradual approach to monetary policy tightening should continue.

Minneapolis Fed president Neel Kashkari suggested the central bank should continue on its current path, and avoid overreacting to one-month upbeat wage and inflation data.

Federal Reserve Bank of Dallas president Robert Kaplan reiterated that the Fed should gradually raise rates in 2018. Kaplan said he expects that inflation will make progress toward 2% over 2018 and the impact of tax-cuts will be seen in 2018.

Market participants, however, await the release of the Federal Reserve’s January minutes to establish whether the duo of speeches calling for an unchanged Fed approach to monetary policy reflected the overall mood among other Fed officials.

Some participants suggested that the minutes were unlikely to show a stark change in the bank’s narrative on inflation and rate hikes given that the January meeting was Janet Yellen’s final meeting.

Stifel chief economist, Lindsey M. Piegza said the Fed in its January policy statement noted a "specific forecast for a "move up" in inflation" in 2018, "warranting a "further" removal of accommodation." Piegza said that the minutes may "provide additional context" on the Fed's expectations on inflation.

In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to interest-bearing assets such as bonds.

In other precious metal trade, silver futures rose 0.83% to $16.58 a troy ounce, while platinum futures fell 0.57% to $998.30 an ounce.

Copper rose 1.89% to $3.22, while natural gas added 1.76% to $2.66.

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