Gold steadied on Tuesday, arresting the previous day’s 1 percent slide as the dollar retreated, but moves were muted as traders awaited the outcome of this week’s Federal Reserve policy meeting.
Gold has fallen 10 percent this year, largely on the back of expectations that the Fed is set to hike rates for the first time in nearly a decade. Rising rates increase the opportunity cost of holding non-yielding bullion. [ECILT/US]
The central bank’s Federal Open Market Committee is expected to announce the rate rise at the end of its two-day policy meeting on Wednesday, but has hinted it intends to hike rates only gradually from there.
Gold could bounce higher after the move as attention switches from the timing of the first rise to the pace of tightening, analysts said.
Spot gold was at $1,062.70 an ounce at 1226 GMT, little changed from $1,062.60 late on Monday, while U.S. gold futures for February delivery were down $1.20 an ounce at $1,062.20.
“Gold continues to be trading in a range until tomorrow,” MKS’ head of trading Afshin Nabavi said. “I would guess the FOMC will hike by 25 basis points. I guess that much is already in the market, so gold could see a push higher and U.S. dollar probably a touch lower.”