Gold firms as spotlight shifts to U.S. Fed meeting
Gold prices edged higher on Tuesday on expectations that the U.S. Federal Reserve will likely end its monetary tightening cycle after a widely expected rate hike this week.
Spot gold was up 0.3% to $1,960.02 per ounce by 09:35 a.m. EDT (1335 GMT), while U.S. gold futures were steady at $1,961.70.
“Gold is expected to be in a range-bound trade before the Fed decision. But there is optimism here that the Fed is almost done with rate hikes and that will support the market,” said Edward Moya, senior market analyst at OANDA.
The focus is on a series of central bank meetings this week, starting from the Fed policy decision on Wednesday, followed by the European Central Bank (ECB) on Thursday and the Bank of Japan a day later.
Markets anticipate 25 basis-point rate hikes from both the Fed and the European Central Bank, but investors will await clues on the outlook from policymakers, especially from Fed Chair Jerome Powell.
“The market will be looking out for Powell’s speech tomorrow and if it seems like they’re more likely leaning towards one more rate hike, then that would be bad news for gold,” Moya said.
Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding it.
GOLD
SELL 1961 - 1964💯💯
✅ TP1: 1957
✅ TP2: 1950
🛑 SL: 1970
Spot gold was up 0.3% to $1,960.02 per ounce by 09:35 a.m. EDT (1335 GMT), while U.S. gold futures were steady at $1,961.70.
“Gold is expected to be in a range-bound trade before the Fed decision. But there is optimism here that the Fed is almost done with rate hikes and that will support the market,” said Edward Moya, senior market analyst at OANDA.
The focus is on a series of central bank meetings this week, starting from the Fed policy decision on Wednesday, followed by the European Central Bank (ECB) on Thursday and the Bank of Japan a day later.
Markets anticipate 25 basis-point rate hikes from both the Fed and the European Central Bank, but investors will await clues on the outlook from policymakers, especially from Fed Chair Jerome Powell.
“The market will be looking out for Powell’s speech tomorrow and if it seems like they’re more likely leaning towards one more rate hike, then that would be bad news for gold,” Moya said.
Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding it.
GOLD
SELL 1961 - 1964💯💯 ✅ TP1: 1957
✅ TP2: 1950
🛑 SL: 1970
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This will likely continue pouring cold water on expectations of a pivot, which surged after Silicon Valley Bank collapsed in March. But, thus far, the economy has for the most part remained unscathed. There is a weak consensus of a further hike to 5.50% - 5.75% by year-end. More importantly, financial markets have essentially fully priced out cuts this year.
