Gold futures reclaimed the key $1,500-an-ounce mark Wednesday, as traders weighed President Donald Trump’s latest tweet calling for the Federal Reserve to cut interest rates down to zero, ahead of the central bank’s meeting next week.
Prices for the yellow metal had wavered between modest losses and gains early Wednesday, after four consecutive sessions of declines.
Trump tweeting Wednesday morning that the “Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt.” The Fed will meet next week and it’s widely expected to announce an interest-rate cut on Wednesday.
“Another bench mark has been set up by the president and it will be interesting how the Fed is going to reply to this when they will meet next week,” Naeem Aslam, chief market analyst at TF Global Markets Ltd., told MarketWatch.
Gold for December delivery GCZ19, +0.23% on Comex tacked on $4, or 0.3%, to settle at $1,503.20 an ounce, reclaiming the psychologically important $1,500 mark after settling below it on Tuesday for the first time since Aug. 6. December silver SIZ19, -0.14% lost 1.6 cents, or 0.09%, to $18.17 an ounce.
Earlier Wednesday, Edward Moya, senior market analyst at Oanda, said “some recent trade optimism and split views on what the ECB will do has kept gold stuck in no-man’s land,” as prices shifted from losses to gains and back again.
The market could see a delay in the European Central Bank’s quantitative easing launch, “that could provide one last downward push [in gold] before we see buyers fully re-emerge,” he said in an email update. “Medium-term outlook still calls for higher gold prices as central bank buying remains strong and the Fed appears to be locked into an easing cycle, despite their hesitation to say so.”
Investors expect the ECB to deliver an interest rate cut and potentially other measures when policy makers meet Thursday.
Gold hit a string of more-than-six-year highs earlier this month as stocks sold off in August with the U.S.-China trade war worsening, but has pulled back this month as equities have steadied. Gold is down around 1% so far this week and 2% since the end of August.
“So, unless risk appetite turns sour again, or the dollar slumps — say, as a result of hawkish ECB or a very poor U.S. CPI report tomorrow — gold could extend its [recent] losses further,” said Fawad Razaqzada, market analyst at Forex.com, in a note, referring to the August consumer-price index.
And gold looks more vulnerable to further weakness than silver, he said, “given the rosier sentiment towards risk assets, with [silver] being supported by its other main use as an industrial material. Hence, or otherwise, the gold-silver ratio has been falling, making silver more appealing (or less attractive to the sellers) in the short term.”
December copper HGZ19, -0.63% lost 0.5% to $2.6145 a pound.
Among exchange-traded funds, SPDR Gold Shares GLD, +0.60% edged up by 0.6%.
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