Gold pauses, still near all-time record high, ahead of Fed news

NEW YORK (August 21) Gold and silver prices are a bit lower in midday U.S. trading Wednesday. December Comex gold futures Tuesday hit a record high of $2,570.40. The precious metals markets are on hold ahead of key Federal Reserve news that lie just ahead. December gold was last down $5.40 at $2,545.20. September silver was down $0.014 at $29.505.

Traders are awaiting this afternoon’s release of the minutes from last week’s Federal Open Market Committee (FOMC) monetary policy meeting. They will be looking for fresh clues on the size of the likely interest rate cut coming in September.

The marketplace is also awaiting the annual Jackson Hole Federal Reserve symposium that begins later this week. Past years have seen central bank officials make markets-moving pronouncements at the confab. Fed Chairman Powell is slated to speak at the symposium on Friday and may give some guidance on the size of an expected U.S. interest rate cut in September.

Broker SP Angel said this morning in an email dispatch: “Traders increased long positions in gold by 18% with greater than $6.7 billion worth of new futures contracts put on last week. U.S. investors are also seen buying gold ETFs to protect from a weaker U.S. dollar. Lower U.S. interest rates herald a weaker U.S. dollar, which should raise gold prices in U.S. dollar terms. Restocking and buying ahead of the Indian wedding season and by the jewelry trade ahead of Christmas tends to lift prices into the autumn. We also believe Chinese investors are buy gold as many private investors do not trust local banks or investment funds. China’s government has said property is for living in and not investing, pushing investors into other asset classes.”

The key outside markets today see the U.S. dollar index lower and hit a 7.5-month low. Nymex crude oil prices are lower and trading around $72.25 a barrel. The benchmark 10-year U.S. Treasury note is presently fetching 3.78%.

KitcoNews