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Bengaluru — Gold prices held steady on Tuesday, caught between lower bond yields and a stronger dollar, as investors watched for signs of how soon the US central bank could wind down pandemic support measures when it meets later in the day.
Spot gold was almost unchanged at $1,786.70/oz by 3.41am GMT. US gold futures fell 0.1% to $1,786.40.
“The market is largely waiting for the outcome of the Fed meeting,” said DailyFX currency strategist Ilya Spivak, adding, the metal was stuck in a narrow range due to two conflicting factors — lower bond yields and a stronger dollar.
The dollar firmed, making bullion more expensive for buyers holding other currencies, while US treasury yields hovered near a one-week trough touched in the previous session.
The US Federal Reserve shall begin its two-day monetary policy meeting later in the day, and it is expected to announce wrapping up its bond buying stimulus sooner than previously communicated, potentially setting up earlier interest rate hikes in 2022.
Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of holding bullion, which bears no interest.
“The real question is, are we going to get a clear-cut hawkish signal? If it’s not as hawkish as the markets have already baked in, we might get a bit of a pop in gold, but the path of least resistance still favours weakness,” Spivak said.
The European Central Bank (ECB), the Bank of England (BOE) and the Bank of Japan (BoJ) are also scheduled to meet this week.
Asian stocks and oil prices slipped, as fears over the Omicron coronavirus variant weighed on investor sentiment.
Spot silver dipped 0.5% to $22.21/oz. Platinum dropped 0.2% to $927.61, while palladium gained 0.2% to $1,685.18.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.