The gold price remained unchanged on Tuesday as investors exercised caution ahead of the U.S. Federal Reserve’s policy meeting later this week, eagerly anticipating clues about potential interest rate adjustments this year.
Spot gold held steady at $2,160.97 per ounce, while US gold futures mirrored the stability at $2,164.40.
All eyes are on the outcome of the Fed’s two-day monetary policy gathering, set to conclude on Wednesday. Market participants await the release of the latest economic projections and interest rate forecasts from Fed officials. It is widely anticipated that the central bank will opt to maintain interest rates at their current levels.
Last week’s optimism surrounding potential Fed rate cuts was tempered by stronger-than-expected growth in producer prices and a significant uptick in U.S. consumer prices for February, resulting in a 1% decline in gold prices.
The attractiveness of non-yielding assets like gold diminishes in environments of rising interest rates. According to the CME FedWatch Tool, traders are currently pricing in a roughly 51% chance of a rate cut by the Fed in June, down from 56% on Monday.
The dollar’s resilience near a two-week high against its counterparts has exerted upward pressure on gold prices for holders of alternative currencies.
In addition to the Federal Reserve, this week will see monetary policy meetings from several other central banks including those of Japan, England, Australia, Norway, Switzerland, Mexico, Taiwan, Brazil, and Indonesia. Most of these banks are expected to maintain their current interest rate settings.
Meanwhile, the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, reported a marginal increase in holdings, rising by 0.18% to 833.32 tonnes on Monday from 831.84 tonnes on Friday.
Elsewhere in the precious metals market, spot silver edged up by 0.2% to $25.09 per ounce, while palladium dipped by 1% to $1,022.21, and platinum remained stable at $915.15 per ounce.
