Gold down 1% as dollar gains; Fed minutes in focus

Gold prices experienced a decline of 1% on Wednesday, as the US dollar strengthened. Investors were waiting for the minutes of the Federal Reserve’s September meeting to assess the level of backing among policymakers for additional rate hikes. Spot gold dropped to $4,119.01 per ounce and US gold futures for December delivery fell 1% to $4,145.50.

The US dollar index increased by 0.5%, making gold denominated in dollars more costly for non-US investors. Ricardo Evangelista, CEO of ActivTrades, noted the caution investors were taking ahead of the Federal Open Market Committee minutes, stating that until there is clearer information on the Fed's support for rate hikes, there may be reluctance to make larger gold investments.

Market expectations indicated the Fed would likely remain steady in October, but there was still an 86% chance of a December hike, according to the CME's FedWatch tool. Fed officials Jeff Schmid and Mary Daly both emphasized the need for interest rates to rise to curb inflation, with Daly stating the decision would depend on the persistence or fading of inflationary factors.

The downside for gold was attributed to geopolitical uncertainty, government debt, inflation, and central bank demand. IMF Managing Director Kristalina Georgieva cautioned about global economic risks stemming from persistently high energy prices, soaring public debt, and the AI investment boom. Meanwhile, delegates from the London Bullion Market Association conference in Italy anticipated gold could reach $5,013 an ounce within the next year.

China's central bank continued its streak of gold purchases, buying the metal for the 23rd consecutive month. Spot silver declined 2.6% to $60.10 per ounce, platinum dropped 3.9% to $1,635.41, and palladium fell 2.9% to $1,138.00.