Weaker dollar overshadowed optimism, and gold prices climbed higher on Wednesday. Meanwhile, investors awaited the Federal Reserve’s decision later in the day.
Spot gold climbed 0.1 % to $1,709.83 per ounce. US gold futures gained 0.2 % to $1,725.20 per ounce.
Kyle Rodda, IG Markets analyst, said that there is a lot of uncertainty around the Fed meeting, and it is supporting gold. In the next few days, there will be a lot of significant events on the economic and business calendar. Furthermore, it is leading to increased risk in the equities market, the analyst said.
The dollar touched a 2-week low in the previous session. The slowing spread of the coronavirus and reopening economics supported the investor mood.
Moreover, Asian shares advanced for a third straight session, and oil prices surged on hopes that demand will improve as countries look to reduce restrictions.
Phillip Futures, a primary futures-based broker, stated that central banks increased liquidity in financial markets, low-interest rates, and raising money supply are bullish for gold in the longer term.
The Fed has cut interest rates, renewed bond-buying, and backstopped credit markets. The central bank’s Wednesday’s statement could begin to define how long it plans to leave the rates near zero.
Gold, seen as a hedge against inflation and currency debasement, tends to benefit from extensive stimulus measures.
Restrictions interrupted economic activity in the US and threw millions of people out of work. As a result, US consumer confidence declined to near a 6-year low.
Bank of Nova Scotia, Scotiabank, announced it would shut down its metals business on Tuesday. It raised fears that gold prices could become less reliable. Analysts think that the bank’s move could affect the precious metal’s prices. Moreover, the Scotiabank could be the first among many banks to exit the metals business.