Gold Prices Little Changed As Fed Meeting Looms

The price of gold showed a lack of direction over the course of the trading day on Friday following the significant rebound seen in the previous session.

After jumping $20.20 or 1.0 percent to $1,978.60 an ounce on Thursday, gold for August delivery edged down edge down $1.40 or 0.1 percent to $1,977.20 an ounce.

The choppy trading came as traders continued to look ahead to the Federal Reserve’s monetary policy meeting next week.

Yesterday’s report showing initial jobless claims jumped to their highest level since October 2021 last week added to the optimism about the Fed pausing its interest rates hikes, as the central bank has warned about the impact of labor market tightness.

Key inflation reports are also likely to be in the spotlight next week, as the data could have a significant impact on the outlook for interest rates.

CME Group’s FedWatch Tool is currently indicating a 73.6 percent chance the Fed will leave rates unchanged next week but a 53.3 percent chance of another quarter point rate hike in July.

With the European Central Bank and the Bank of Japan also due to announce their monetary policy decisions next week, Edward Moya, senior market analyst at OANDA, noted volatility should be elevated and said the price of gold could break out of the $1,950 to $2,000 an ounce range.

“It might hinge on the US inflation report, which should show pricing pressures are easing,” Moya said. “The Fed seems likely to pause their tightening cycle and if the updated forecasts remain optimistic inflation is going to get a lot closer to target, that could be good news for gold bulls.”

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