Gold prices retreat from 14-month high ahead of Fed decision

Gold prices slipped on Wednesday, pulling back from the metal’s highest settlement in 14 months, as investors awaited a key decision from the Federal Reserve, which catalyze moves in gold and a broader market hoping for a rate cut.

August gold GCQ19, -0.24% declined $4, or 0.3%, at $1,346.70 an ounce, after the contract notched the highest most-active contract settlement since April 18, 2018, according to FactSet data.

“Gold prices are awaiting fresh clues from the world’s largest central banks that fresh stimulus is on the way,” wrote Edward Moya, senior market analyst at Oanda, in a Wednesday research note.

The Fed decision is set to occur at 2 p.m. Eastern Time. Market participants are anticipating that the central bank led by Chairman Jerome Powell will signal a willingness to reduce benchmark interest rates, currently at a range of 2.25%-2.50%. The chairman will host a news conference at 2:30 p.m. to discuss the Fed’s updated policy outlook.

Expectations for lower rates can buttress bullish buyers of gold because the asset doesn’t offer a coupon.

However, yields for benchmark debt were edging higher, with the yield for the 10-year Treasury note TMUBMUSD10Y, +1.67% climbed to 2.08%, which can make government debt more appealing to buyers seeking haven assets compared against bullion.

Prices for precious metals have been buoyant because investors have bought so-called haven assets against a backdrop of uncertainty about a near-term tariff resolution between China and the U.S. and fears that the global economy is weakening. On Tuesday, European President Mario Draghi suggested that the ECB could introduce more stimulus if the eurozone economy weakens further.

In other metals dealings, July silver SIN19, -0.05% shed 5 cents, or 0.4%, at $14.940 an ounce, after the precious metal climbed 1.1% on Tuesday, while July copper HGN19, -0.30% slipped by a penny, or 0.3%, to $2.694 a pound, after a 2.1% gain the day before.