Gold prices remained below the $5,000 mark on Wednesday as investors awaited the release of minutes from the Federal Reserve’s January meeting for further guidance on the outlook for U.S. interest rates.
Gold futures (GC=F) rose 0.9% to $4,949.60 an ounce, while spot prices fell to $4,930.63 after hitting $4,862 an ounce in the previous session, the lowest level in more than a week.
Ajay Kedia, director at Kedia Commodities, told Reuters that “gold prices found support today above $4,850… which is a technical rebound,” after falling in the previous session as geopolitical tensions eased. “
The market is also paying attention to the U.S. personal consumption expenditures report for December released on Friday, which is expected to provide further clues on the direction of interest rates this year. Markets currently expect the Federal Reserve to cut interest rates in June. Non-yielding gold typically benefits from a lower interest rate environment.
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Chicago Federal Reserve President Austan Goolsby said on Tuesday that the central bank may authorize “multiple” interest rate cuts this year if inflation continues to slide toward its 2% target.
However, Federal Reserve Governor Michael Barr said there are ongoing risks to the outlook for U.S. inflation and another rate cut is likely soon.
“I expect gains to remain capped and bulls to support selling, which will keep gold prices between $4,700 and $5,100 in the near term,” said Matt Simpson, senior analyst at StoneX.
Oil prices edged higher on Wednesday, but gains were capped as investors balanced initial optimism about restarted U.S.-Iran nuclear talks with a lack of breakthroughs that could ease concerns about supply risks.
Brent crude oil (BZ=F) futures were up 0.4% at $67.66 a barrel at the time of writing, while West Texas Intermediate crude oil (CL=F) was also up 0.4% at $62.48 a barrel.
Attention has focused on comments by U.S. Vice President Vance, who said the second round of talks with Iran was productive “in some respects” but that Tehran was “not yet willing” to engage in certain “red lines” set by President Donald Trump.
“Our main interest is we don’t want Iran to get a nuclear weapon,” the vice president said in an interview on Fox News.
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The Iranian delegation is led by Foreign Minister Abbas Araghchi, and the U.S. delegation is led by Special Envoy Steve Witkov.
Araghchi said progress had been made at the Geneva meeting and called the atmosphere “more constructive.”
“The two sides decided to draw up a draft of a potential agreement after exchanging texts,” he said. “The time for the next round of talks will be determined.”
Araghchi said the understanding did not mean a deal was imminent.
The talks are closely watched by energy markets because Iran is a major oil producer (BZ=F, CL=F) and sits along the strategically important Strait of Hormuz, a narrow waterway that accounts for about a fifth of global oil consumption every day.
The pound fell against major currencies on Wednesday as the latest UK inflation data paved the way for a rate cut in March.
Sterling was steady at $1.3563 against the dollar and rose 0.1% against the euro to €1.1456.
XTB analysts wrote: “The pound has reversed its performance from being the worst-performing currency on Tuesday to being the most resilient in the G10 FX space this morning as UK inflation is higher than expected in core and services rates, which are less benign than expected.”
“However, this does not hide the fact that sterling is weakening as UK economic data deteriorates and remains the weakest currency in the G10 FX space so far this month.”
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The U.S. Dollar Index (DX-Y.NYB), which measures the greenback against a basket of six major currencies, rose to 97.28.
“We’re seeing a little bit of strength in the dollar on the FOMC minutes, on durable goods, and maybe just unwinding some shorts ahead of that,” said IG market analyst Tony Sycamore. “But I just feel like we’re kind of stalled.”
On the stock market front, the FTSE 100 index (^FTSE) was higher on Wednesday morning, rising 0.5% to 10,607 points.
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