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Gold Finally Tops $1,350 as Investors Wait for FOMC Minutes

August 16, 2016 at 17:28 by Andrew Moran

Gold finally topped the often watched $1,350-per-ounce level to start off Tuesday’s trading session. As the day went on, the yellow metal slightly pared some of its gains. But going above this threshold has provided gold bugs with some more confidence about the precious metal’s remaining 2016.

December gold futures climbed $9.76, or 0.73%, to $1,350.06 an ounce at 16:57 GMT. Gold is set for back-to-back advances after finishing last week down 0.1%.

Silver remained relatively unchanged on Tuesday. September silver futures rose just $0.01, or $0.05%, to $19.83 an ounce. Silver crossed the important $20-an-ounce level at the beginning of the trading session before paring some of its gains.

The yellow metal advanced after the US dollar weakened. Gold also benefited from a pullback in stocks, a day after they reached record levels yet again this year.

Moreover, gold prices have been pushing upwards following reports that inflation stayed flat in July. This could give the Federal Reserve another reason to delay a hike to interest rates next month. The US central bank will release the latest minutes from the Federal Open Market Committee (FOMC) July meeting on Wednesday. Investors will comb through it to determine if there are any hints pertaining to potential upcoming changes to monetary policy.

Fed Chair Janet Yellen will deliver a speech next week during the central bank’s annual summer retreat in Wyoming. It is expected that Yellen will talk about a number of topics, including the US economy, monetary policy, and labor conditions.

Investors, meanwhile, have been trying to disseminate comments from two Fed officials this week.

San Francisco Fed President John Williams wrote in an economic letter on Monday that the Fed should think about raising its inflation target rate higher than 2%.

New York Fed President William Dudley told the Fox Business Network on Tuesday that the Fed should go for a rate hike in September.

We’re edging closer towards the point in time where it will be appropriate I think to raise interest rates further. The labor market is getting target. We’re starting to see signs of wage gains starting to accelerate. The economy is in OK shape.

rising-rate environment does not bode well for gold and silver because they do not provide a yield to investors, who will seek out higher returns elsewhere in the marketplace.

If you have any questions and comments on the commodities today, use the form below to reply.

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