Picture: 123RF/LIMBI007
Picture: 123RF/LIMBI007

Bengaluru — Gold traded in a tight range on Tuesday, pinned below the $1,800 psychological level, as investors focused on this week’s Federal Reserve meeting for clues about when the central bank might rein in its easy monetary policies.

Spot gold was flat at $1,797.71 an ounce by 3.24am GMT. US gold futures fell 0.1% to $1,797.70 an ounce.

The dollar index held steady just below recent peaks. The greenback has been rising broadly for more than a month as markets are wary of the Fed starting to taper its monetary support.

“Investors are waiting for the Federal open market committee meeting for more clues on the direction of the US dollar and its ramifications to the gold prices,” said Margaret Yang, a strategist at DailyFX.

The two-day meeting will start on Tuesday and a policy statement will be issued at 6pm GMT on Wednesday, followed by a news conference by Fed chair Jerome Powell. Investors will be looking at how the Fed responds to fast-rising prices while facing increasing threat posed by the more contagious Delta variant of the coronavirus.

“The market has perhaps underestimated the adverse impact that the Delta variant could bring to economic rebound and give central banks reason to delay tapering,” Yang said.

In the medium term, gold prices will have more room to go up if central banks continue to implement their accommodative monetary policies, she said. Large stimulus measures tend to support gold, which is often considered a hedge against inflation and currency debasement.

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.2% to 1,025.64 tonnes on Monday, the lowest since May 13. The ETF has seen outflows of about 20 tonnes so far in July.

Elsewhere, silver fell 0.1% to $25.14 an ounce, palladium was down 0.9% to $2,632.75, and platinum eased 0.4% to $1,059.61. 

Reuters

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