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Gold price falls 1% as dollar rebounds ahead of Fed minutes

Image courtesy of the Federal Reserve Bank of Atlanta.

Gold prices fell 1% on Wednesday as the precious metal was weighed by a rebound in the dollar ahead of the release of US central bank’s minutes from its May meeting.

Spot gold dropped to $1,847.55 per ounce by 1:40 p.m. ET, on its way to snapping a five-session winning streak. US gold futures traded at $1,846.50 per ounce in New York.

[Click here for an interactive chart of gold prices]

Meanwhile, the US dollar gained 0.4%, after hitting its lowest level in a month on Tuesday, making gold more expensive for overseas buyers.

“The market is fixated on the Fed’s path for rate hikes … If the minutes signal couple more rate hikes, it could hurt gold. But if the Fed takes a cautious tone that would be good news for gold,” Edward Moya, senior analyst with OANDA, told Reuters.

The US Federal Reserve is due to release the minutes from its May 3-4 Federal Open Market Committee policy meeting at 2 p.m. ET.

Investors are expecting 50-basis-point rate hikes in June and July, with Fed Chair Jerome Powell having promised to raise rates as high as needed until there is evidence that inflation is dropping.

Atlanta Fed President Raphael Bostic warned earlier that headlong rate hikes could create “significant economic dislocation.”

(With files from Reuters)