Prior to central bank rate decisions, gold rises in early trade

24 Jul 2023 , 11:59 AM

In early Asian trading on Monday, gold prices increased slightly as traders anticipated a crucial meeting of the US Federal Reserve, which would result in the suspension of interest rate increases after July.

Spot gold increased 0.051 to $1,961.27 per ounce. Nearly 0.3% was earned by gold last week. American gold futures decreased 0.2% to $1,963.10.

Due to a stronger dollar making gold more expensive for holders of other currencies, the dollar index was stable and held close to its over one week high reached on July 20.

This week’s decisions from the Federal Reserve, the European Central Bank (ECB), and the Bank of Japan all fall within a 48-hour window from Wednesday to Friday.

The focus will be on what Fed Chairman Jerome Powell and ECB President Christine Lagarde say about the future because the markets are fully priced on quarter point hikes from the Fed and ECB.

Holding non-yielding bullion has a higher opportunity cost when interest rates are higher.

Although investors have not been impressed by Beijing’s moves thus far, more stimulus measures may be presented at this week’s Politburo meeting in China.

Economists surveyed by Reuters predict that the BOJ will maintain its current monetary and yield control policies.

In the week ending July 21, demand for physical gold in India stagnated, although bullion was sold in top consumer China at substantial premiums.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, reported that its holdings increased by 0.57% to 919.00 tonnes on July 21 from 913.80 tonnes on July 20.

Spot silver increased by 0.2% to $24.64 an ounce, platinum decreased by 0.2% to $959.94, and palladium fluctuated little at $1,289.83.

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