Gold prices steadied on Tuesday, ahead of the Federal Reserve's two-day policy meeting, as investors awaited more information on outlook for rate cuts by the US central bank.
Spot gold was down 0.1pc at $1,425.41 per ounce as of 10:15 a.m. EDT (1415 GMT), while US gold futures were up 0.4pc to $1,425.30.
"The market is anticipating a cut at the Federal Open Market Committee (FOMC) meeting tomorrow, but what is up in the air is the extent of that. If Fed Chair Jerome Powell comes out a more dovish-than-expected, gold might hit a multi-year high," said Daniel Ghali, commodity strategist at TD Securities.
Market participants expect the US central bank to cut its benchmark interest rate for first time since the financial crisis more than a decade ago. Federal funds futures implied traders saw a 81pc chance of a 25 basis-point rate cut.
The Federal Reserves is scheduled to announce its monetary policy decision at 2 p.m. EDT (1800 GMT) on Wednesday as well as issue a statement.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar.
"Liquidity is still thin as traders seem to be holding back before the Fed gives its views on monetary policy," said Benjamin Lu, an analyst at Phillip Futures, adding that a firm dollar was putting pressure on gold prices.
The dollar held close to a two-month peak against key rivals, making greenback-denominated assets such as gold costlier for investors holding other currencies.
On the technical front, "Gold is holding a narrow range ahead of the FOMC meeting results with support standing at just below $1,420 per ounce and more importantly at $1,410," INTL FCStone analyst Rhona O'Connell said in a note.
Meanwhile, investors will also keep a close eye on US-China trade talks in Shanghai this week.
Officials from both the countries restarted negotiations, after talks stalled in May, in a bid to end a year long tit-for-tat tariffs war. Expectations of a breakthrough are low.
Reflecting investors' appetite for bullion, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.8pc to 824.89 tonnes on Monday.
Holdings have risen for second straight month, gaining nearly 4pc so far in July.
Among other precious metals, silver was steady at $16.46, while platinum slipped 0.6pc to $874.06.
Palladium dropped 0.7pc to $1,542 after touching its highest in two weeks in the previous session.
Comments
Comments are closed.