2024.01.0317:55:00UTC+00Gold Moves Sharply Lower As Fed Minutes Loom

After ending the previous session slightly higher, the price of gold showed a substantial move back to the downside during trading on Wednesday.

Gold for February delivery moved sharply lower early in the session and remained firmly negative throughout the day before closing down $30.60 or 1.5 percent at $2,042.80 an ounce.

The steep drop by the price of gold came as the U.S. dollar extended the strong upward move seen on Tuesday, with the U.S. dollar index climbing by 0.4 percent.

The continued advance by the dollar and subsequent slump by gold came as traders looked ahead to the release of the minutes of the Federal Reserve's latest monetary policy announcement.

Craig Erlam, OANDA Senior Market Analyst, UK & EMEA, said the steep drop by the price of gold "could be a sign that investors view the moves late last year as a bit over the top or simply some profit-taking ahead of the minutes and Friday's jobs report."

"I don't think traders' views have fundamentally changed though, with 150 basis points of rate cuts from the Fed heavily priced in this year," he added.

On the U.S. economic front, a report released by the Institute for Supply Management showed U.S. manufacturing activity contracted at a slightly slower rate in the month of December.

The ISM said its manufacturing PMI rose to 47.4 in December from 46.7 in November, but a reading below 50 still indicates contraction. Economists had expected the index to inch up to 47.1.

The Labor Department also released a report showing job openings in the U.S. edged down from an upwardly revised level in the month of November.