Sat, January 28, 2023

Gold prices in cautious trade ahead Fed meeting

Gold prices in cautious trade ahead Fed meeting

Gold declined amid the cautious trade on Wednesday as investors looked forward to the US Federal Reserve’s latest policy decision.

Accordingly, futures tied to the yellow metal declined 0.46% or 8.60 points to $1,921.05 per troy ounce.

It trailed a plunge of 1.59% to $1,929.70 per troy ounce yesterday, hovering around a two-week low. Nevertheless, bullion contracts trade 2.52% higher over the past month.

Meanwhile, the XAU/USD exchange rate slightly edged up 0.08% or 1.63 points to $1,919.52. It gradually reversed its significant Tuesday drop of 1.71% to $1,917.84.

Accordingly, markets refrained from taking huge risks ahead of the American central bank’s widely expected interest rate hike decision.

Traders anticipated the Fed to raise rates by a quarter-point to combat the mounting inflation, the first increase since 2018.

They also forecast the bank to provide a new quarterly forecast. This estimate could show as many as a half-dozen increases for the year and possibly three or four in 2023.

Then, US Treasury yields jumped to their highest level in more than two-and-a-half years today. For instance, the ten-year bonds added 0.007 points to the 2.167% level.

Notably, the precious metal is susceptible to rising interest rates. A hawkish policy change elevates the opportunity cost of holding non-yielding bullion.

Across the Atlantic, the Bank of England will release its policy decision on Thursday. In addition, investors kept an eye closed on the European Central Bank conference on the same day.

Eventually, the Bank of Japan will hand down its own monetary policy a day later.

Moreover, US President Joe Biden will head to Europe in the following week. He will discuss Russia’s invasion of Ukraine with NATO allies during the visit.

Gold down as Palladium, Platinum rise

At the same time, the Holdings of SPDR Gold Trust plummeted 1.87% or 3.41 points to $178.89.

Then, the Central Bank of the Russian Federation also said it would suspend purchases of bullion from banks.

This move aims to meet increased demand from households and deal with the impact of Western sanctions on Moscow.

Conversely, Palladium futures edged up 0.20% or 5.00 points to $2,407.50 per troy ounce. Then, Platinum contracts strengthened 1.27% or 12.80 points to $1,015.25 per troy ounce.

Meanwhile, silver followed the downward trend of gold. It slashed 0.64% or 0.16 points to $24.992 per troy ounce.

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