As investors anticipate the Fed's decision, gold trades in a limited range in early trade

26 Jul 2023 , 11:12 AM

As traders anticipated the widely anticipated rate hike by the U.S. Federal Reserve and a probable end to its monetary tightening cycle, gold prices struggled to find direction in early Asian trading on Wednesday.

Spot gold was unchanged at $1,964.14 per ounce, while U.S. gold futures moved up 0.1% to $1,965.90.

The Fed policy decision on Wednesday, the ECB meeting on Thursday, and the Bank of Japan meeting on Friday are the three central bank meetings that are in the market’s focus this week.

According to the CME FedWatch tool, traders anticipate that the U.S. Fed will maintain interest rates in the range of 5.25%–5.5% through March 2024.

As the opportunity cost of storing non-yielding bullion increases, gold is particularly susceptible to rising interest rates.

The dollar and U.S. Treasury yields remained close to Tuesday’s two-week highs, increasing the cost of zero-interest bullion for buyers using other currencies and capping gains.

Despite reaching a two-year high in July, U.S. consumers continued to be concerned about a coming recession due to the country’s high interest rates.

The U.S. Commerce Department is also anticipated to publish that new home sales decreased in June from 763,000 units in May to a seasonally adjusted annual pace of 725,000 units.

In contrast, China, the world’s largest consumer of the metal, saw its net imports of gold through Hong Kong drop by almost 29% in June to their lowest level in five months. 

Spot silver prices dropped 0.3% to $24.61 an ounce, platinum prices increased 0.1% to $966.18, and palladium prices increased 0.3% to $1,287.86.

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