Gold rises to a two-week high of $1877.21, supported by falling US Treasury yields.
Fed minutes reveal concerns about dual risks to inflation and economic activity, influencing policy outlook.
US producer inflation data and divergent Fed policy stances complicate gold’s path.
The price of gold (XAU/USD) rose for the second day in a row, hitting a two-week high of around $1877.21 on Wednesday, as US Treasury yields fell on the back of the latest Fed minutes. At the time of writing, the XAU/USD is trading at 1874.73, almost unchanged at the start of the Asian session.
Meanwhile, the US Dollar Index continued to retreat from last week’s 11-month highs, providing a tailwind for the XAU/USD. In addition, the benchmark 10-year US Treasury yield retreated from its highest level since 2007. These factors contributed to the rise in gold prices.
The US Federal Reserve recently released the minutes of its September monetary policy meeting. According to these minutes, participants acknowledged both upside risks to inflation and downside risks to economic activity. This suggests a two-sided challenge in achieving the Fed’s objectives. Policymakers also noted that as policy was nearing its peak, decisions and communications should begin to shift to a longer horizon of higher rates for an extended period.
In other news, the US Department of Labor (DoL) reported that producer price inflation figures were better than expected, with most of the readings higher than in August. However, the monthly reading for the Producer Price Index (PPI) rose less than the previous month, suggesting that inflation remains a concern, possibly influenced by high energy prices and the auto union strike.
In terms of recent statements from Fed officials, many have taken a more neutral stance, with the exception of Fed Governor Michelle Bowman, who emphasised the need for further tightening to address inflationary pressures.
