Fed Minutes: Prudent To Wait For Further Evidence Before Hiking Again

Gold held steady early on Wednesday, after falling 0.7 percent in the previous session, as investors waited for cues on the US Federal Reserve's rate hike stance from minutes of the central bank's latest meeting. Since then, the US economy has made marked improvements as the unemployment rate holds below 5%, inflation has moved within striking distance of the central bank's 2% target, and consumers remain optimistic and spending at a robust rate.

As much as investors were looking for signs of the next rate hike in the minutes, they also are awaiting word from the Fed on how it plans to reduce the assets on its balance sheet.

"Gold could face more pain if tonight's [Federal open market committee] minutes show that the Fed is on course for two to three more rate hikes this year", said Jeffrey Halley, a senior market analyst at Oanda. That could give the Fed impetus to continue with its path of monetary tightening. It fell to an 8-day low against the Swedish crown EURSEK= after the Swedish central bank called on regulators to introduce a leverage ratio requirement on the country's banks.

Dow e-minis were up 3 points, or 0.01 percent, with 13,477 contracts changing hands.

Nasdaq 100 e-minis were up 9.25 points, or 0.16 percent, on volume of 20,397 contracts.

A nine month extension cut along with a fifty-fifty chance of a token cut would send a loud positive message to the market, Peter Cardillo, chief market economist at First Standard Financial wrote in a note. The dollar was boosted as USA debt prices fell, with the benchmark 10-year Treasury note yield climbing 3 basis points overnight and putting some distance between the one-month trough reached last week in a bond-buying flight to safety.

General Electric was off 1.8 percent and was the biggest drag on the S&P after the company said its profit forecast was at the high end of expectations.

Bunge fell 7 percent to $76 after the grains trader said it was not in talks with Swiss mining and commodities group Glencore, following an informal approach.

Shares in retailer Lowe's tumbled in pre-market trade after its first-quarter earnings missed analysts' expectations, but chip maker Nvidia was on the front foot following a report that Japan's SoftBank has racked up a $4bn stake in the company.

  • Zachary Reyes