© Archyde.com. Gold bars at a facility in West Point, New York, USA. Photo from Archyde.com archive.
(Archyde.com) – It fell on Wednesday with a rally following the release of the minutes of the latest Federal Reserve meeting on monetary policy, which showed that policymakers support more rate hikes to curb inflation.
It fell 0.5 percent to $1,825.60 an ounce by 1932 GMT. US gold futures contracts settled down 0.1 percent, to $1,841.50 an ounce.
Although gold is considered a tool to hedge against inflation, high interest rates increase the opportunity cost of owning the precious metal, which does not yield a return.
“The minutes supported the notion that the Fed could continue to tighten massively for a little while longer and could stay in control of tightening until they actually see inflation come down,” said Edward Moya, senior market analyst at OANDA.
“After the minutes were issued, we saw the dollar continue to rise slightly and we will likely see more upward pressure on yields, which keeps gold under pressure,” he added.
The minutes of the US Central Bank’s meeting held on January 31 and early February showed the agreement of a strong majority of bank officials to slow the pace of raising key interest rates to a quarter of a percentage point, and they also agreed that the risk of high inflation is still a “major factor” in policy-making. Cash and supported the continuation of the rate hike.
The dollar rose 0.3 percent, near a one-week high against major currencies, making gold more expensive for holders of other currencies.
Among other precious metals, it fell in spot transactions by 1.6 percent to $21.48 an ounce, while platinum rose 0.4 percent to $946.44. It fell 2.6 percent, recording $1,486.72 an ounce.
(Prepared by Doaa Muhammad for the Arabic Bulletin)