Gold prices firm on weaker dollar

by Jonathan Adams
Gold prices

Spot gold rose 0.4% at $1,806.00 per ounce, and U.S. gold futures added 0.4% to $1,806.90

Prices of gold firmed on Wednesday above the key psychological level of $1,800 on a weaker dollar, though gains were capped as investors awaited a Federal Reserve meeting for clues on the U.S. central bank’s policy tapering plans.

Spot gold rose 0.4% at $1,806.00 per ounce, as of 0328 GMT. U.S. gold futures added 0.4% to $1,806.90.

Gold is benefiting from some risk-hedging buying by investors ahead of tonight’s FOMC (Federal Open Market Committee) meeting outcome, Jeffrey Halley, a senior market analyst, Asia Pacific at OANDA said.

Overall, gold remains anchored within a broader $1,790-$1,810 range and lacks the momentum to convincingly break either side for now. That may change post-FOMC, he said.

Fed’s policy statement is due at 1800 GMT later in the day which would be followed by a news conference by Chairman Jerome Powell.

Bullion dipped 7% in June on the Fed’s hawkish tone in its last meeting.

Investors will look for cues on when the central bank will begin to taper its monetary support amid fast-rising prices and the looming threat from Delta variant of coronavirus.

The Fed will likely announce the first of a scheduled round of reductions to its bond purchase program, but will leave its rate rising schedule still some ways down the road, Edward Meir, analyst with ED&F Man Capital Markets said in a note. However, any selloff in gold will be more measured as the complex has discounted much of the Fed move already.

Meanwhile, the U.S. dollar was below the 3-1/2-month peak hit last week, due to a decline in real yields and trepidation ahead of the Fed’s policy decision.

Asian shares were also at a seven-month low on Wednesday.

Silver gained 0.6% to $24.81 per ounce, after hitting $24.46 on Tuesday – its lowest level in nearly four months.

Palladium inched up 0.3% to $2,615.60 per ounce, while platinum jumped 0.8% to $1,058.61.

This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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