Gold Prices Ease As Investors Await Fed Meeting Minutes

Gold prices slipped on Tuesday after touching a two-week high in the previous session, with spot gold falling as much as 0.9% to $4,127.59 per ounce in early trade. U.S. gold futures for August delivery also eased by 0.7% to $4,139.50 as investors waited for fresh signals from the U.S. Federal Reserve on the path of interest rates.

The decline followed Monday's rally, when bullion climbed to its highest level in two weeks. Investors are now looking ahead to the release of the minutes from the Federal Open Market Committee's 16-17 June meeting on Wednesday, hoping for more clarity on how Fed Chair Kevin Warsh plans to approach monetary policy.

Why Are Investors Waiting For The Fed Minutes?

Gold prices remained under pressure as traders avoided making large bets ahead of the Fed's meeting minutes. The document is expected to provide fresh insight into the central bank's thinking on inflation, economic growth and the outlook for interest rates.

The June meeting was the first under Warsh's leadership. The Fed also removed references to the likely direction of future interest rate moves, signalling a more flexible policy approach.

Fed Governor Christopher Waller said on Monday that forward guidance can be a useful monetary policy tool when used appropriately, although he cautioned that relying on it too rigidly could reduce the central bank's flexibility in responding to changing economic conditions.

What Could Move Gold Prices Next?

Last week's weaker-than-expected U.S. jobs data prompted traders to reduce expectations of an early interest rate increase. According to the CME FedWatch Tool, markets now see roughly a 56% to 57% chance of a rate hike in September, down from more than 60% before the employment data was released.

Gold typically becomes less attractive when interest rates rise because the metal does not generate any yield.

Elsewhere in the precious metals market, spot silver, platinum and palladium also traded lower. Meanwhile, Perth Mint reported that its gold product sales rose 53% in June from May to a two-month high, while silver sales declined 19%.

Separately, Hong Kong launched a central clearing system for gold and resumed gold futures trading as it seeks to strengthen its position as a regional hub for precious metals trading.

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