Gold down as markets await Fed meeting minutes for policy direction

Synopsis

Gold prices declined Tuesday, trading below recent highs. Investors await U.S. Federal Reserve minutes for policy direction. U.S. services sector activity dipped, but employment showed stability. Bullion prices retreated from earlier record highs this year. Perth Mint gold sales reached a two-month peak in June.

Gold prices fell on Tuesday, trading below a two-week high hit in the previous session, as investors looked ahead to the release of the U.S. Federal Reserve's June meeting minutes for insight into new Chair Kevin Warsh's monetary policy direction.

FUNDAMENTALS

Spot gold fell 0.4% to $4,148.59 per ounce by 0043 GMT, while U.S. gold futures for August delivery eased 0.2% to $4,160.20.

The Federal Open ‌Market Committee's ⁠June 16-17 ⁠meeting minutes will be released on Wednesday.

Forward guidance can be a "valuable tool" that speeds the impact of monetary policy under the right circumstances, though it can be a problem when used inflexibly, Fed Governor Christopher Waller said on Monday.

U.S. services sector activity dipped in June as some of the boost from businesses rushing to place orders amid the Middle East war ebbed, but employment rebounded after contracting for three ⁠straight months, ‌pointing to continued labor market stability.

Gold prices have retreated more than 25% from record highs reached earlier this year, as the U.S.-Israel war ⁠with Iran stoked inflation concerns, boosted the dollar and reinforced expectations of interest rate hikes this year.

However, bullion hit a two-week high on Monday as the U.S.-Iran ceasefire deal eased some of those inflation concerns and last week's weaker-than-expected U.S. jobs data prompted markets to dial back expectations for a near-term interest rate hike.

Traders now see about a 57% chance of a rate increase in September, down from more than 60% before the data, ‌according to the CME FedWatch tool.

Lower rates make zero-yield bullion more attractive for investors.

Citi has become the fifth bank to clear transactions in London's over-the-counter gold market, the world's ⁠largest bullion trading centre, in a major expansion of its precious metals business, the bank said on Monday.

Perth Mint's gold product sales hit a two-month high in June, up 53% from May, while silver sales declined 19% from May, the refiner said on Tuesday.

Elsewhere, spot silver slipped 0.8% to $61.57 per ounce, platinum eased 0.8% to $1,618.78 and palladium fell 0.4% to $1,264.11.

DATA/EVENTS (GMT)

0600 Germany Industrial Output MM May

0600 Germany Industrial Production YY May

0600 UK Halifax House Prices MM, YY Jun

0645 France Reserve Assets Total Jun

1230 US International Trade $ May

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