• Gold prices ended higher Wednesday, getting a boost as downbeat U.S. economic data and North Korea’s ballistic-missile test drew investor interest to the precious metal.
• After gold settled for the session, prices briefly struggled for direction in electronic trading, before eventually easing back as investors weighed the release of minutes from the U.S. Federal Reserve’s June meeting.
• The metal managed to recoup some of the losses it suffered on Monday, when prices dropped 1.9%—the biggest single-session percentage decline of the year. August gold GCQ7, +0.32% tacked on $2.50, or 0.2%, to settle at $1,221.70 an ounce for the session, after briefly trading as low as $1,216.50.
• In electronic trading after the release of the Fed minutes, prices traded above $1,223, then fell to lows under $1,220. It was at $1,219.90 about a half-hour following the release.
• “The Fed minutes were anticlimactic, revealing little that the investing public didn’t already assume,” Brien Lundin, editor of Gold Newsletter, told MarketWatch.
“On balance, the Fed viewed the recent lower inflation indications as transitory, and it seems that more than a couple of officials would like to being shrinking the balance sheet ‘within a couple of months’,” said Lundin. “This gave the minutes a slightly more bearish tint that weakened gold, although the effect was, as yet, fairly minor.”
• The summary of the central bank’s last meeting suggests that it could trigger a long-awaited move to reduce its massive $4.5 trillion in debt holdings by September. Balance-sheet reductions can have the effect of an added tightening to interest rates, because it theoretically removes a big Treasury buyer from the market, pushing bond prices lower and yields higher.
• Gold investors, however, will likely look to further comments from Fed officials due to speak later this week, including Fed Vice Chair Stanley Fischer on Thursday, for hints on the timing of interest-rate hikes.
• Rounding out action on Comex, September silver SIU7, +0.84% split with its sister metal, falling 19.6 cents, or 1.2%, to $15.896 an ounce, and settling at its lowest levels of the year.
Reference: Market Watch
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