Gold Remains Month-Lowest, Awaiting for Fed Policy Decision

Gold rose in early Asian trading on Wednesday, but it was still close to its lowest level in four weeks. The U.S. dollar stabilized ahead of the long-awaited Fed policy decision.

The Fed will announce its decision at the end of the two-day meeting later in the day. Investors are looking for clues about when the central bank will begin to reduce the size of its assets. However, Fed officials have insisted that monetary policy will continue to be dovish for a while so far. Concerns about rising inflation have caused gold to fall from a high in the past five months.

The U.S. Central Bank is beginning a long road towards the normalization of relations with Washington and Wall Street.

The U.S. Central Bank has been providing exceptional help to the federal government and investors. The support involves the purchase of trillions of dollars in bonds over the past 15 months. Thus, preliminary discussions about reducing this support can begin. However, actual steps in this direction may be months away time.

Gold fell from its high in the past five months. Thus, investors weighed inflationary pressures against the possible response of the central bank.

Fed officials may expect to raise interest rates in 2023

However, Fed officials are not likely to signal asset reduction until August or September 2021.

The recent weakness is related to concerns that the Federal Reserve will tighten monetary policy soon. In addition, the slight strengthening. 

Dhar said that as the global economy recovers, the bank expects that the U.S. 10-year actual yield will rise slightly in the medium term while the dollar will weaken. He said that increasing real yields should put slight downward pressure on gold prices. On the other hand, a weaker U.S. dollar should put some upward pressure. As a result, gold prices may trade in the range of US$1,700 to US$1,900 per ounce.

After falling for three consecutive days, Singapore spot gold barely changed at 7:53 in the morning and reported $1,858.15. The price plunged to US$1,844.92 on Monday, the lowest intraday level since May 17. Silver, platinum, and palladium all held steady.