Gold headed slightly lower on Wednesday as the dollar bounced back ahead of the release of the Fed’s July meeting minutes.
The minutes, which will be released at 7pm UK time, will reveal what was said at the Fed’s latest policy meeting and could give an indication as to the timing of any interest rate hikes.
“It is a game of wait and see as far as the dollar is concerned, and by extension buck-denominated gold, with traders largely sitting on their hands ahead of the release of the FOMC minutes later on,” said forex.com analyst Fawad Razqzada.
The dollar’s weakness yesterday made the greenback-denominated precious metal more attractive to investors buying with foreign currencies, although gold gave up those gains today as the buck bounced back.
A rate hike would likely see the price of gold fall as it increases the opportunity cost of bullion, which doesn’t pay any interest or a dividend, while also boosting the dollar which tends to pull in the opposite direction to the yellow metal.
Gold has enjoyed a strong 2016 so far, making the most of its ‘safe haven’ status to capitalise on global economic and political uncertainty.
Hedge fund managers cut their bets on gold
Several big-name hedge fund managers reduced their bets on gold during the second quarter, it’s been revealed.
Prominent fund manager Stanley Druckenmiller closed his entire position on the metal in the SPDR Gold Trust exchange traded fund (ETF), which had been his fund’s biggest investment.
Similarly George Soros also closed a position he had in the same ETF, while billionaire John Paulson also trimmed some of his gold stocks.
It’s worth noting that all three still have an interst in gold in one form or another.
Shortly after UK close, gold was flat at US$1,346, silver was down 11c to US$19.65, and platinum was down US$9 to US$1,106.