Gold prices retreat from 14-month high ahead of Fed decision

Gold prices slipped on Wednesday, pulling back from the metal’s highest settlement in 14 months, as investors awaited a key decision from the Federal Reserve, which catalyze moves in gold and a broader market hoping for a rate cut.

August gold GCQ19, -0.24% declined $4, or 0.3%, at $1,346.70 an ounce, after the contract notched the highest most-active contract settlement since April 18, 2018, according to FactSet data.

“Gold prices are awaiting fresh clues from the world’s largest central banks that fresh stimulus is on the way,” wrote Edward Moya, senior market analyst at Oanda, in a Wednesday research note.

The Fed decision is set to occur at 2 p.m. Eastern Time. Market participants are anticipating that the central bank led by Chairman Jerome Powell will signal a willingness to reduce benchmark interest rates, currently at a range of 2.25%-2.50%. The chairman will host a news conference at 2:30 p.m. to discuss the Fed’s updated policy outlook.

Expectations for lower rates can buttress bullish buyers of gold because the asset doesn’t offer a coupon.

However, yields for benchmark debt were edging higher, with the yield for the 10-year Treasury note TMUBMUSD10Y, +1.67% climbed to 2.08%, which can make government debt more appealing to buyers seeking haven assets compared against bullion.

Prices for precious metals have been buoyant because investors have bought so-called haven assets against a backdrop of uncertainty about a near-term tariff resolution between China and the U.S. and fears that the global economy is weakening. On Tuesday, European President Mario Draghi suggested that the ECB could introduce more stimulus if the eurozone economy weakens further.

In other metals dealings, July silver SIN19, -0.05% shed 5 cents, or 0.4%, at $14.940 an ounce, after the precious metal climbed 1.1% on Tuesday, while July copper HGN19, -0.30% slipped by a penny, or 0.3%, to $2.694 a pound, after a 2.1% gain the day before.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya