Gold prices fall on dollar strength as focus shifts to Fed – News Couple

Gold prices fall on dollar strength as focus shifts to Fed

The gold bar is wrapped in a financial newspaper.

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Gold prices fell on Tuesday as the US dollar and stocks rose ahead of the much-anticipated US Federal Reserve meeting that may provide a timetable for raising interest rates amid mounting inflationary pressures.

The basics

Spot gold was down 0.3% at $1,787.04 an ounce by 01:35 PM ET. US gold futures fell 0.4% to $1,789.40.

Jim Wyckoff, chief analyst at Kitco Metals, said continued strength in stocks ahead of the Fed’s statement on Wednesday continues to weigh on safe haven metals.

Wyckoff said recent inflation concerns have capped gold’s downside and helped buy interest.

While gold is used as a hedge against inflation, lower stimulus and higher interest rates tend to push government bond yields higher, raising the opportunity cost of holding non-yielding bullion.

The Federal Reserve is expected to approve plans to scale back its bond-buying program on Wednesday, when it concludes its two-day policy meeting.

“I expect the Fed to announce the start of tapering, but I don’t see a specific timing around a rate hike,” said Carsten Fritsch, commodity analyst at Commerzbank.

“This could lead to some frustration as market participants are expecting something more specific that could push gold towards $1800 an ounce or even further.”

The dollar index strengthened, making gold more expensive for holders of other currencies.

Markets will also be watching the Bank of England monetary policy meeting on Thursday.

Lukman Otunuga, senior research analyst at FXTM, said in a report, “The coming week could be volatile for gold prices… The yellow metal is likely to be affected by dollar movements, Treasury yields, inflation expectations and global risk sentiment.” note.

Silver fell 2.3 percent to a two-week low of $23.46 an ounce. Platinum slipped 2.4% to $1,038.82 an ounce, while palladium slipped 1.8% to $1,069.

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