Gold dips near US$4,000 as Fed holds rates with little guidance

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Photo by BulentCamci/Getty ImagesGold declined after the Federal Reserve kept borrowing costs steady and offered few clues on its next move, leaving open the prospect of a rate hike before year-end.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountBullion fell as much as 1.3 per cent to near US$4,015 an ounce, reversing three days of modest gains. The Federal Open Market Committee voted 10-two in favour of holding interest rates steady, while Fed Chair Kevin Warsh said the central bank would likely reduce the number of rate decisions to six from eight per year — a move that analysts said could foster uncertainty.This advertisement has not loaded yet, but your article continues below.For gold traders, the Fed’s decision on Wednesday was largely expected. The wider market has priced in a rate hike in December, as stubbornly high energy prices complicate efforts to rein in inflation. Tighter monetary policy is a headwind for gold, which doesn’t pay interest.The United States Personal Consumption Expenditures price index — the Fed’s preferred inflation gauge — came in broadly in line with expectations on Thursday, leaving little impact on gold.With bullion poised near the US$4,000-an-ounce threshold for much of this week, investors “are in a wait-and-see mode,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank AS. “Having rebounded from key technical support around US$3,970, the tug of war between short-term momentum sellers and longer-term accumulators continues,” he said.Thinner liquidity as the year draws to a close could also amplify price moves in either direction, with gold finding “a solid bottom” only when interest rates peak, Yuxuan Tang, head of rates and foreign-exchange strategy for Asia at JPMorgan Private Bank, said in an interview.This advertisement has not loaded yet, but your article continues below.Gold has declined about three per cent in October, on course for a second monthly drop, and remains vulnerable to broader equity liquidations as traders assess whether artificial intelligence spending is weighing on cash flow. An AI-led stocks rout last week helped drag bullion to the lowest since July, as investors sold gold to cover losses in equities.“At current price levels, it’s almost flip-a-coin territory,” Saxo Bank’s Hansen said. On the upside, crossing key technical levels of US$4,070 and US$4,230 an ounce could force funds “back in on the buy side,” he added.Spot gold fell one per cent to US$4,026.11 an ounce at 1:11 p.m. in London. Silver slipped 2.7 per cent to US$52.55 an ounce, and has lost about 12 per cent so far this month. Platinum and palladium also retreated. The Bloomberg Dollar Spot Index, a gauge of the U.S. currency, rose 0.2 per cent.—With assistance from Jack Ryan.We apologize, but this video has failed to load.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. 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