Gold Prices Exceed $4900 Amid Anticipation of Federal Reserve Minutes

SadaNews - The price of gold rose again above $4900 per ounce as buyers rushed to seize the dip after a two-day decline, while traders await the release of the minutes from the Federal Reserve's latest meeting.

The precious metal increased by up to 0.9% in weak trading on Wednesday, as a significant part of Asia was closed for the Lunar New Year holiday.

The metal had lost more than 3% during the previous two sessions, when the value of the U.S. dollar strengthened. A key index measuring the U.S. currency rose by up to 0.4% on Tuesday before trimming its gains.

Sharp Volatility After a Record Surge

A strong surge had pushed the price of gold to a record level above $5595 per ounce in late January, but the market experienced excessive buying, causing prices to drop to around $4400 in just two sessions. Although the metal has recovered about half of these losses, trading has remained unusually volatile since the drop.

Several banks, including BNP Paribas, Deutsche Bank, and Goldman Sachs, expect prices to resume their upward trend, as the factors that supported the previous gradual rise in gold remain in place.

These factors include rising geopolitical tensions and a move away from sovereign bonds and currencies, along with concerns about the independence of the Federal Reserve.

Anticipation of Federal Reserve Minutes

In the short term, investors will focus on comments from Federal Reserve officials for clues about U.S. monetary policy, as well as the minutes from the January meeting, when policymakers decided to keep interest rates unchanged, which is set to be released later on Wednesday.

The tendency to lower interest rates is a supportive factor for non-yielding precious metals, as gold rose briefly on Friday after moderate inflation data bolstered justifications for lowering borrowing costs.

Federal Reserve Governor Michael Barr said on Tuesday that interest rates should remain stable "for some time" until officials see more evidence that inflation is heading towards the central bank's 2% target.

In contrast, Chicago Federal Reserve President Austin Goolsbee indicated that there is a possibility for further cuts this year if inflation continues on its path towards that target.

Gold prices in spot transactions rose by 0.9% to $4919.63 per ounce at 11:30 a.m. in Singapore. Silver climbed by 1.2% to $74.40 per ounce. Platinum increased by 1.8%, while palladium rose by 1.6%. The Bloomberg Dollar Spot Index rose by 0.1%.