Gold futures edged lower in European trade as stocks rebounded on Thursday, but the precious metal managed to stay above $1,200 amid indications that the Fed would slow the pace of U.S. interest rate increases this year.
Gold prices for April delivery on the New York Mercantile Exchange’s Comex division eased $4.10, or 0.34%, to trade at $1,207.30 by 3:55AM ET.
Minutes from the Federal Reserve’s January meeting published on Wednesday showed that policymakers considered revising their planned interest rate hikes for 2016 as the global slowdown could affect the U.S. economy
They discussed the possibility of changing “earlier views of the appropriate path for the target range for the federal funds rate,” the minutes revealed.
The policymakers agreed it would be too early to revise their outlook for the U.S. economy, adding they would closely monitor global economic developments as well as keep an eye on oil and stock prices.
Gold prices rose to a one-year high of $1,263.90 on Thursday last week, as investors took the safer route. The precious metal is up nearly 14% so far this year as the Federal Reserve may find it hard to justify further interest rate hikes this year amid global economic slowdown and financial headwinds.
While the U.S. central bank has planned for four more rate hikes this year, current market conditions don’t support such move, leading market participants to speculate that the Feds may delay the pace of future rate increases.
A gradual increase in interest rates is viewed as less of a threat to gold prices than a series of quick ones.
Elsewhere in metals trading, futures for copper dropped as investors digested the monthly inflation data coining out of China, which is the world’s largest consumer of copper.
The Asian nation accounts for 45% of the world’s copper consumption.