Gold Retreats from Record Levels Affected by Strong Dollar and Profit Taking
The precious metals markets witnessed a decline in the price of gold during trading on Wednesday, influenced by a slight increase in the value of the US dollar and investor activity in profit taking, after the yellow metal recorded a record high in the previous session amid cautious optimism regarding the Federal Reserve's monetary policy.
Gold fell in spot trading by 0.1% to settle at $3684.10 per ounce, thus interrupting its brilliance that had pushed it the previous day to touch a record peak of $3702.95. The December futures contracts for gold followed the same percentage decline, reaching $3718.50 per ounce.
Analysts see this fluctuation as part of the market's anticipation for the Federal Reserve's decision expected later today. Tim Waterer, chief market analyst at KCM Trade, explained that "the rise of gold to $3700 was supported by a decline in the dollar and bets that the Fed may signal the possibility of further rate cuts before the end of the year."
Waterer also added, commenting on the recovery prospects, "Profit-taking near the $3700 level led to a decline in the precious metal below this threshold, but if the Fed adopts a very accommodative tone in its meeting, gold may record a new wave of ascent."
Investors are awaiting the US central bank's statement in hopes of gaining hints about the pace of future monetary easing, especially with expectations of a quarter-point rate cut to support the labor market. The remarks of Federal Reserve Chairman Jerome Powell are expected to be closely monitored to gauge the direction of monetary policy. It is noted that lower interest rates make holding gold, which does not yield a return, more attractive.
US President Donald Trump had previously called on Powell to make a "bigger" cut in interest rates.
In a related development, the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, announced an increase in its holdings of the precious metal by 0.32% on Tuesday, reaching 979.95 tons compared to 976.80 tons the previous day.
As for the performance in the rest of the precious metals sector, silver saw a notable decline of 1.3% to record $41.98 per ounce, while platinum recorded a slight increase of 0.1% to reach $1392.25. Palladium continued its upward trend with an increase of 0.5% to reach a price of $1182.21 per ounce.
