Gold Dips Below Two-Week High Ahead of Fed Minutes
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- Spot gold fell 0.6% to $4,138.32 per ounce by 0232 GMT on Tuesday, while U.S. gold futures for August delivery eased 0.4% to $4,149.90
- Gold hit a two-week high on Monday as a ceasefire deal eased inflation concerns, and remained set for a weekly gain despite the Tuesday dip
- Bullion has retreated more than 25% from record highs reached earlier this year, as the US-Israeli war with Iran stoked inflation concerns, boosted the dollar and reinforced rate-hike expectations
- Traders now see about a 56% chance of a Fed rate increase in September, down from more than 60% before last week's weaker-than-expected U.S. jobs data
- New Fed Chair Kevin Warsh's first meeting removed references to potential rate adjustments on the grounds that forward guidance makes the central bank less nimble — a contrast with Governor Christopher Waller, who called it a "valuable tool"
- Hong Kong launched a central clearing system for gold on Tuesday and revived gold futures trading, seeking to become a regional reserve hub for the precious metal
Why it matters: Wednesday's Fed minutes are the next directional catalyst for traders who have already repriced September rate-hike odds from 60%+ to 56% on soft jobs data. The 25% pullback from record highs reflects the unwind of the Iran war premium as a ceasefire took hold, while Hong Kong's new gold clearing system — buried late in the story — is its structural bid to rival London as a regional hub.
