Gold holds steady before Fed meeting, eyes Powell's comments for clues

30 Jan 2024 , 01:13 PM

Gold prices flitted in a tight range on Tuesday ahead of the U.S. central bank’s verdict on rates and comments from Chair Jerome Powell for clarity on the timing of easing monetary policy, though a weak dollar and lower bond yields lent support.

Spot gold remained stable at $2,030.90 an ounce. At $2,022.90, U.S. gold futures increased by 0.3%.

The dollar index declined by 0.2%, which often increases the allure of gold to holders of other currencies. Benchmark U.S. Treasury note yields were close to a two-week low.

The markets overwhelmingly anticipate that the U.S. Fed will maintain current interest rates during its two-day policy meeting, which begins later today. However, Powell’s remarks on Wednesday will garner the majority of attention.

Traders are placing bets on five quarter-point rate cuts in the United States for 2024; the first is expected to occur in March, according on LSEG’s interest rate probability software IRPR.

According to a Reuters poll released on Monday, record gold prices in 2024 could be driven by economic instability and U.S. interest rate decreases.

Holding bullion has a lower opportunity cost when interest rates are lower.

Despite this, dealers and analysts have reduced their projected prices for palladium and platinum in 2024 as demand fails to increase dramatically, though they still believe that prices will climb from present levels.

The world’s largest exchange-traded fund backed by gold, SPDR Gold Trust, reported that its holdings decreased by 0.14% on Monday compared to the previous session.

Spot silver decreased by 0.1% to $23.17 an ounce, while palladium fell by 0.3% to $980.14 and platinum declined by 0.2% to $924.66.

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