Gold prices fell on Wednesday, as investors awaited the minutes of the last meeting of the Federal Reserve, searching for indications that monetary policy makers are heading to continue raising interest rates.
Gold in spot transactions fell 0.3 percent to $4,150.23 an ounce by 01:45 GMT, while US gold futures fell 0.2 percent to $4,177.60.
The minutes of the last meeting of the Federal Open Market Committee are scheduled to be issued later on Wednesday, with investors awaiting any signals regarding the extent of support within the Federal Reserve for further raising interest rates.
Frank Wallbaum, market analyst at Naga.com, said that gold may remain relatively stable with a slight tendency to decline, noting that the minutes of the meeting will clarify the direction of monetary policy and the extent of policymakers’ support for additional interest increases, which may reshape the markets’ expectations for future movements.
He added that movements in long-term US Treasury bond yields, the dollar, and oil prices, resulting from any developments in the Middle East, may increase the impact of these signals on the direction of gold.
Recent statements by Federal Reserve officials showed the central bank’s commitment to continuing to combat inflation. Federal Reserve President Mary Daly in San Francisco said that the need to raise interest rates again depends largely on whether the factors driving inflation to rise will decline or continue.
Kansas City Fed Chairman Jeff Schmid also said that interest rates still need to rise further to reduce inflation.
Recent weak economic data has led to a decline in expectations for a rate hike in October, but traders are still pricing in an 85 percent chance of raising it by December.
Higher interest rates usually increase the attractiveness of yield-generating assets compared to gold, which does not generate a return.
In an indication of the continued bullish expectations for gold in the medium term, participants at the annual conference of the Bullion Market Association in London, held in Sorrento, Italy, expected the price of gold to reach $5,013 per ounce during the next 12 months.
In separate developments, US Vice President J.D. Vance said, in an exclusive interview with Reuters, that Iran must make a “significant” reduction in its ability to enrich uranium to meet American demands and end the war that has been ongoing for seven months.
Silver fell in spot transactions about 1 percent to $61.12 per ounce, while platinum rose 0.2 percent to $1,704.25, and palladium fell 0.3 percent to $1,168.20.
Moody's, the credit rating agency, said that Saudi Arabia's expected financial recovery in 2027 supports its expectations of continuing to make prudent decisions regarding spending and borrowing, noting that rearranging government investments helps the Kingdom maintain financial space, while continuing to implement economic diversification plans.
The agency added, in a comment on the preliminary statement of the Saudi budget for the year 2027, that the prolonged trade disturbances and additional spending limited the financial improvement that it had previously expected, but it saw that the trend towards controlling spending in the coming year supports the Kingdom’s financial path.
Saudi Arabia expects total spending in 2027 to reach about 1.392 trillion riyals ($371.2 billion), compared to revenues estimated at about 1.202 trillion riyals ($320.5 billion), resulting in a deficit of about 190 billion riyals ($50.7 billion), or 3.6 percent of the gross domestic product.
Moody's believes that rearranging government investment priorities allows continued spending on economic diversification projects, while at the same time reducing pressures on public finances. This is in line with the government’s tendency to continue implementing priority projects with economic and social returns, while maintaining the sustainability of public finances.
On the oil side, the agency said that it expects disruptions in strategic maritime shipping routes to continue until mid-2027, which may affect oil production. However, it indicated that the rise in crude prices helped mitigate the impact of the decline in production and exports during the recent period.
These expectations come at a time when the Ministry of Finance estimates indicate a contraction in real GDP by 3.6 percent in 2026, affected by a decline in oil activities by about 21.8 percent, while non-oil activities are expected to grow by 3.2 percent. The growth of non-oil activities reached 1.8 percent during the first half of the year, bringing their contribution to the output to 57.3 percent.
Moody's comment reflects a fiduciary reading of the preliminary statement that focuses on Saudi Arabia's ability to recalibrate the pace of spending and investment instead of retreating from the diversification agenda, which helps maintain financial flexibility in light of a geopolitical and commercial environment that remains highly volatile.
