Gold prices were almost unchanged after they fell by 1.15% yesterday and reached their lowest level since September 20. Investors took a wait-and-see attitude ahead of the release of the minutes of the September Fed meeting, which may provide clues on the direction of interest rates.
Meanwhile, the US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.16% to 102.72 (a new 7-week high), reducing the appeal of gold for investors holding other currencies.
The Fed's September meeting minutes will be released at 18:00 GMT. Investors are also looking ahead to key U.S. inflation data: the consumer price index (CPI) report on Thursday and the producer price index (PPI) on Friday. Experts said that gold may get a boost if the CPI report shows softer inflation, though reaching new highs this year would require broader U.S. economic underperformance.
According to the CME FedWatch Tool, markets see a 86.8% probability of a 0.25% rate cut at the November meeting (compared to 64.8% a week earlier) and a 78.5% probability of a 0.25% rate cut in December (compared to 35.7% a week earlier), with a 0.5% rate cut expected by the end of the year. Zero-yield bullion tends to thrive in a low interest rate environment.