Gold pares losses as Fed’s Williams signals 2027 end to hikes
Fed Bank of New York president’s expectations for no further tightening next year should be ‘positive’ for the metal, says TD Securities
Gold prices showed signs of recovery on Tuesday after Federal Reserve Bank of New York President John Williams indicated that another rate hike may not be necessary for 2027. The metal experienced a loss of up to 0.6 percent earlier in the session, trading near $4,164 per ounce. Analysts attribute the gold's resilience to the reduced likelihood of higher carry costs in 2027, as expressed by Williams' remarks.
Lower interest rates typically benefit gold, which does not bear interest. Fed officials' future actions are anticipated to be revealed through the release of key economic data, including the US consumer price index, producer price index, and import prices later in the week. Swaps traders currently price in a minimal chance of a rate hike at the October meeting, but estimate a 90 percent probability of an increase in December.
Despite elevated interest rate expectations, gold's resilience indicates that other factors continue to drive demand for the precious metal. Factors such as concerns over France's debt burden and the increasing double-edged sword nature of higher rates are contributing to this demand. Spot gold saw a slight decline of 0.2 percent to $4,162.71 an ounce at 2:49 pm New York time, while silver rose 2 percent to $59.25.
Platinum and palladium also experienced a minor decrease. The Bloomberg Dollar Spot Index fell by 0.2 percent.
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