Investing.com - Gold prices edged higher on Wednesday as investors waited for the publication of the minutes from the latest Federal Reserve policy meeting with expectations for them to confirm the central bank’s dovish policy stance.
At 9:25 AM ET (14:25 GMT), gold futures for April delivery on the Comex division of the New York Mercantile Exchange gained $1.95, or 0.15%, to $1,346.75 a troy ounce, its best level since May 14.
At 2:00PM ET (19:00 GMT), the Fed will release the minutes of the Jan. 30 meeting when it left interest rates on hold and pledged to be patient with further interest rate hikes, dropping its guidance that “further gradual” rate rises will be needed.
The central bank also said it could alter the pace of its balance sheet reduction “in light of economic and financial developments”.
Investing.com analyst Darrell Delamaide commented that policymakers are reaching a consensus after reversing course 180 degrees.
“Quantitative tightening, which Federal Reserve chair Jerome Powell likes to refer to as ‘balance sheet runoff’, is no longer on autopilot,” he said.
A string of officials - most recently Cleveland Fed president Loretta Mester and Fed governor Lael Brainard - have been talking up the pause in the balance sheet reduction.
The dovish shift in tone to the Fed’s message implies a longer pause in rate hikes, which keeps a lid on the opportunity cost of holding non-interest bearing gold.
In other metals trading, palladium futures marked yet another record high as stricter emissions standards pump demand for the metal used in catalytic converters. At 9:27 AM ET (14:27 GMT), the metal gained 1.04% to $1,468.95 an ounce, a new record high.
Palladium enjoyed its fifth straight session of gains on Wednesday as a report by Johnson Mathey forecasting a deficit in the market this year gave new legs to a rally now in its sixth month.
“While it's exciting to jump into an asset after good news, it could also be the worst time to do so, as it's the traders who got in before the headlines who take profits,” Investing.com analyst Pinchas Cohen warned.
Cohen offered three possible trading strategies according to risk profiles with an overall recommendation to remain cautious and wait to buy into a dip.