Federal Reserve Meeting Minutes Could Drive Market Trends

On Wednesday, the US dollar fell against other major currencies, in line with the global decline in bond yields. Meanwhile, gold prices rose for the sixth consecutive session, supported by the weakness of the dollar and safe-haven buying.

Investors are eagerly awaiting the minutes of the Federal Reserve’s latest monetary policy meeting, expected to be released later, in order to obtain more signals about the outlook for interest rates.

The decline in the dollar came against the backdrop of declining yields on US Treasury bonds in line with global counterparts. This came after Canadian inflation data came in lower than expected and wage growth in the Eurozone, all of which led to lower local yields amid expectations of interest rate cuts by global central banks this year, according to Reuters.

The US currency dropped to below 150 yen in Asian trades, reaching 149.97 yen in the latest transactions, giving the Japanese currency some breathing room after remaining near its lowest levels in 3 months in previous sessions.

Jen Foley, a senior FX strategist at Rabobank, said: “It is interesting that the order and extent of policy movements affecting market rates appear to have only vague connections to levels of economic activity in each of the G10 economies. It is clear that the timing and pace of central bank policy movements this year still have a long way to go.”

Gold rose by 0.4 percent in spot trading to $2030.7 per ounce by 04:11 GMT, its highest level since February 9th.

Futures contracts for gold rose by 0.1 percent to $2041.3 per ounce. The dollar index continued its losses for the third consecutive day, making the yellow metal priced in the American currency more attractive to foreign buyers.

According to the senior analyst at Reliance Securities, Jigar Trivedi, the slight decline in the dollar index is supporting gold prices, and we are witnessing some buying activity as a safe haven due to escalating tensions in the Middle East.

He added: “All eyes are on the Federal Reserve’s meeting minutes, and it is expected that gold prices will continue to rise.”

It is likely that the Federal Reserve will decrease interest rates in June, according to a small majority of economists surveyed by Reuters.