Gold prices reached a two-week high on Tuesday, as the U.S. dollar relinquished recent six-month highs in anticipation of this week’s central bank meetings, commencing with the U.S. Federal Reserve’s meeting later in the day.
Spot gold remained stable at $1,932.32 per ounce by 0257 GMT, after reaching its highest level since September 5 earlier in the session. Meanwhile, U.S. gold futures held steady at $1,953.90.
The U.S. dollar exhibited a 0.1% decline against its counterparts, rendering gold more affordable for international buyers. This drop in the dollar came ahead of significant central bank policy decisions to be made by the United States, Britain, and Japan throughout the week.
While the Federal Reserve is widely expected to maintain interest rates at their current levels during its policy announcement on Wednesday, the focal point will be on their future rate projections.
Michael Langford, Chief Investment Officer at Scorpion Minerals, remarked, “Fed Chair Powell’s speech is likely to highlight that inflation risks have not gone away but they are in a wait-and-see mode for inflation.” He further noted that low inventories of gasoline and diesel on a global scale represent a substantial near-term risk to inflation targets. Langford added that if inflation experiences a significant surge, it could become more challenging to control.
Gold, as a non-interest-bearing asset, may experience diminished appeal if the Fed proceeds to raise rates in an effort to combat inflation.
Federal Reserve officials, who have cautiously embraced the notion that they can curb inflation without triggering a recession, are meeting this week against a backdrop of new risks to their optimistic outlook. These risks include an autoworkers strike, a potential federal government shutdown, and the burden of student loans on consumers.
In the realm of other metals, spot silver saw a 0.3% decline, trading at $23.16 per ounce, while platinum experienced a 0.4% decrease, reaching $929.49 per ounce. Palladium, on the other hand, witnessed a 0.8% increase, rising to $1,246.21 per ounce.
