Gold dips as markets wait for direction from the Federal Reserve
Precious metal may gain support if Fed chair Jerome Powell sounds dovish
Bengaluru — Gold prices edged lower on Wednesday, weighed down by a firmer dollar, as markets awaited the US Federal Reserve’s monetary policy decision and developments around a stimulus package in the world’s largest economy.
Spot gold dipped 0.2% to $1,846.42/oz by 0349 GMT. US gold futures eased 0.3% to $1,845.30.
“Gold appears to be in a holding pattern as investors are waiting for the Fed,” said Jeffrey Halley, a senior market analyst at Oanda.
The US central bank is expected to stand pat on policy when it announces its decision at 1900 GMT. Market participants will be watching for comments from Fed chair Jerome Powell for clues on the state of the economy.
“If Powell remains ultra dovish and indicates they have no intention of tapering, that can boost gold up to $1,880,” Halley said.
An easy monetary policy adds pressure on government bond yields and benefits non-yielding gold. The dollar rose 0.1%, making gold expensive for holders of other currencies. Also in focus is US President Joe Biden’s $1.9-trillion coronavirus relief plan, which analysts expect to be cut down when it passes through the Senate.
Lending some support to prices were worries over a surge in global coronavirus cases, which surpassed 100-million, as countries struggle with new virus variants and vaccine shortfalls.
“Though the advent of vaccines has placed a ray of hope in eradicating the coronavirus, mass vaccination is still deeply challenging,” Phillip Futures said in note. “Expectations are not high that there would be any new monetary stimulus measures from the Fed on improving economic conditions yet amid the slow global rollout of coronavirus vaccines, the Fed may surprise.”
Silver fell 0.5% to $25.31/oz, platinum shed 0.8% to $1,089.19 and palladium was flat at $2,323.98.
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