AGE Daily Gold Update

AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.

8/17/2022: Gold trims losses after Fed

Source: Bill Musgrave, American Gold Exchange

Austin — Gold dropped 0.7% to close at a two-week low under $1,777 as yields and the dollar rose ahead of the release of the Fed's July minutes. The metal trimmed its losses in electronic trade and pushed as high as $1,784 after then Fed left the door open to smaller rate hike.

At the July meeting of the FOMC, Fed officials agreed on the need to raise interest rates high enough to slow the economy. While noting that the economy was "noticeably weaker" in July, and that unemployment is likely to rise this year, a regime of increasingly "restrictive" interest rates is still needed, the minutes said,

But the central bankers also signaled their openness to slowing the pace of rate hikes, acknowledging the risk of tightening monetary policy "by more than necessary" in the quest for price stability.

Fed funds futures traders heard this message as carrying slightly dovish undertones. The odds of a September rate hike of 50 basis points rose to 64% from 59%, according to CME FedWatch, while the odds 75 basis points fell from 41% to 36%.

Prior to the Fed minutes, the dollar rose 0.2% against major rivals on hawkish expectations, only to retrace half that gain on the dovish read.

Likewise, Benchmark 10-year Treasury yields rose before and backtracked after the minutes, helping gold to trim its losses by decreasing the opportunity cost for holding instead of bonds as a safe-haven asset.

The other precious metals were also lower, with silver sliding 0.7% while platinum lost 1,3% and palladium shed 0.6%.

At the Comex close: December gold dropped $13 to $1,776.70; September silver fell 35 cents to $19.73; October platinum slid $12 to $919.30; and September palladium lost 12.30 to $2,136.70 an ounce.