Comments
Gold prices held steady on Wednesday as investors were cautious ahead of the conclusion of US Federal Reserve's two-day meeting, where policymakers are expected to raise interest rates for the third time this year.
Spot gold was little-changed at $1,200.43 per ounce, as of 0712 GMT, having moved in a narrow $4 range during the session and testing key resistance at $1,200. US gold futures were flat at $1,204.70 an ounce.
“People are waiting for cues from the Fed ... I think the Fed will stay the course. But they could mention that the trade war (between China and United States) could impact growth,” National Australia Bank economist John Sharma said.
Fed rate hike
The Fed will end its policy meeting later on Wednesday at which it is expected to raise interest rates for the eighth time since late 2015. Investors are also counting on another rate hike before year-end, though the outlook for 2019 is less clear.
“The Fed may incite recent softness in housing and auto sales, as well as a rather mixed “Beige Book” survey out last week that could conceivably justify moderation in its rate outlook,” INTL FCStone analyst Edward Meir said.
“We think the dollar will weaken post statement, and say this in view of the fact that it has been progressively selling off ahead of the Fed meeting, telling us that investors are likely discounting relatively dovish wording.”
Dollar index
A strong dollar makes dollar-priced gold costlier for non-US investors, while rising US interest rates typically deter investors from buying a non-yielding asset such as gold. The dollar index, which weighs the greenback against a basket of six major currencies, was almost flat at 94.117.
Gold dropped about 12 per cent since hitting a peak in April, marred by rising US interest rates and a global trade war that has led investors to choose the dollar as a safe haven rather than gold.
“People are realising that the trade war is likely going to continue. It is benefiting the US dollar now, but it could affect the U.S. economy as well, hurting the dollar (and boosting gold),” Sharma said.
US President Donald Trump's top trade official had said on Tuesday that changing China's economic policies to become more market-oriented “is not going to be easy” even with tariffs now in place on $250-billion worth of Chinese goods.
Among other precious metals, spot palladium slipped 0.3 per cent to $1,058.24 an ounce, after marking its highest since late-January at $1,068.50 in the previous session. Silver rose 0.5 per cent to $14.48, moving closer to a more than three-week high of $14.56 reached on Tuesday. Platinum rose 0.4 per cent to $825.90 per ounce.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.