Gold price on hold ahead of crucial Fed rate announcement

19 Mar 2024 , 09:29 AM

Tuesday’s gold price was unchanged as investors abstained ahead of this week’s policy meeting of the U.S. Federal Reserve, which may provide more hints regarding when interest rate cuts this year are likely to occur.

Spot gold was slightly altered at $2,160.97 per ounce. At $2,164.40, US gold futures were unchanged.

The outcome of the Fed’s two-day monetary policy meeting, which ends on Wednesday, is the main focus. The market is waiting for officials to release their most recent estimates of the economy and interest rates. The U.S. central bank is widely expected to keep rates unchanged.

The expectation of early Fed rate cuts was dashed last week when statistics revealed that producer prices grew more than anticipated and U.S. consumer prices gained substantially in February. This resulted in a 1% decline in gold prices.

Having non-yielding gold becomes less appealing when interest rates rise. According to the CME FedWatch Tool, traders are currently pricing in a roughly 51% possibility of a rate drop from the Fed in June, down from 56% on Monday.

The dollar was trading close to a two-week high versus its competitors, pushing up the price of gold for holders of other currencies.

This week, in addition to the Federal Reserve, the central banks of Japan, England, Australia, Norway, Switzerland, Mexico, Taiwan, Brazil, and Indonesia will meet. It is anticipated that the majority of them will maintain current rates.

The largest exchange-traded fund backed by gold in the world, SPDR Gold Trust, reported that its holdings increased by 0.18% to 833.32 tonnes on Monday from 831.84 tonnes on Friday.

Spot silver increased by 0.2% to $25.09 per ounce, palladium decreased by 1% to $1,022.21, and platinum was stable at $915.15 per ounce.

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