Gold Futures Settle Modestly Higher Ahead Of Fed Decision

Gold futures settled higher on Wednesday, with investors picking up the safe haven asset amid rising geopolitical tensions in Europe and looking ahead to the Federal Reserve’s interest rate decision.

However, the yellow metal’s uptick was just modest as the dollar climbed ahead of the Fed announcement.

The Fed is widely expected to hike interest rates by 75 basis points. Some analysts expect the rate to be hiked by as much as 1%.

CME Group’s FedWatch Tool is currently indicating an 84% chance of a 75 basis points rate hike and a 16% chance of a 100 basis point rate hike.

The dollar index rose to a fresh two-decade high of 111.11, gaining more than 0.8%.

Gold futures for December ended higher by $4.60 or about 0.3% at $1,675.70 an ounce, coming off the session’s high of $1,686.70.

Silver futures for December ended up by $0.297 at $19.480 an ounce, while Copper futures for December settled at $3.4670 per pound, down $0.0360 from the previous close.

Geopolitical tensions returned to the fore after Russian President Vladimir Putin announced the partial mobilization of his country’s military in a significant escalation of the war in Ukraine.

As the war in Ukraine reaches nearly seven months and Moscow loses ground on the battlefield, Putin said in a rare national address that Russia would use all the means at its disposal to protect its territory.

The Russian leader also backed plans for Russia to annex occupied areas of southern and eastern Ukraine, appearing to threaten nuclear retaliation if Kyiv continues its efforts to reclaim that land.

In U.S. economic releases, a report from the National Association of Realtors showed existing home sales in the country declined for the seventh consecutive month but dipped by a relatively modest 0.4% to an annual rate of 4.80 million in August after plummeting by 5.7% to a revised rate of 4.82 million in July.

Economists had expected existing home sales to tumble by 2.3% to an annual rate of 4.70 million from the 4.81 million originally reported for the previous month.

Despite falling by much less than expected, existing home sales still dropped to their lowest level since spring of 2020.

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