Gold prices traded in a tight range on
Tuesday, as cautious investors focused on the Federal Reserve’s
policy decision this week where the U.S. central bank is
expected to hike rates aggressively in an effort to curb
Spot gold held its ground at $1,676.12 per ounce, as
of 0406 GMT.
U.S. gold futures rose 0.4% at $1,685.50.
The Fed, at the conclusion of its two-day policy meeting on
Wednesday, is expected to raise interest rates by 75 basis
points (bps), with market participants even seeing a 19% chance
for a 100 bps increase.
“Higher Treasury yields and a stronger dollar on the back of
expectations for more aggressive Fed’s policies have been
headwinds for gold prices,” IG market strategist Yeap Jun Rong
“More aggressive projections from policymakers compared to
current market expectations could reveal a higher-for-longer
stance for rates, which may not be well-received by gold
Rising interest rates dent gold’s appeal, as they increase
the opportunity cost of holding non-yielding bullion.
Even though the dollar index dipped 0.2%, it wasn’t
far from a 20-year high. A firmer greenback makes bullion more
expensive for other currency holders.
The benchmark 10-year Treasury yield held close to its
highest level in over a decade scaled on Monday.
Mirroring investor sentiment, holdings in the SPDR Gold
Trust , the world’s largest gold-backed exchange-traded
fund, fell to 30,799,131 ounces on Monday, the lowest since
Inflation concerns have also prompted other central banks
across the globe to tighten monetary policy.
Spot gold may edge up to a resistance at $1,685 before
falling, according to Reuters technical analyst Wang Tao.
Elsewhere, spot silver lost 0.6% to $19.50 per ounce.
Platinum fell 0.1% to $918.51 and palladium was
down 2.4% at $2,172.19.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by
Sherry Jacob-Phillips and Rashmi Aich)