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Gold prices down for third day as dollar firms ahead of Fed meeting

Spot gold was down 0.2% at $1,861.96 per ounce, as of 0224 GMT, after falling to its lowest since May 17 at $1,843.99 on Monday

Topics
Gold Prices | US Fed monetary policy | Dollar rise

Reuters 

Photo: Reuters
Photo: Reuters

By Brijesh Patel

(Reuters) - on Tuesday fell for a third straight day, as an uptick in the dollar dented the safe-haven metal's appeal, while investors awaited the U.S. Federal Reserve meeting for clues on the central bank's monetary policy outlook.

Spot gold was down 0.2% at $1,861.96 per ounce, as of 0224 GMT, after falling to its lowest since May 17 at $1,843.99 on Monday.

U.S. gold futures eased 0.1% to $1,863.10.

"The strengthening U.S. dollar is weighing on Technically, gold has broken down a key support level and it seems to be entering into a bearish trend," said Margaret Yang, a strategist at DailyFX.

"There seems to be surging demand for the Fed's reverse repo facility, which suggests that liquid conditions in the market are ample. This means that the market is probably prepared to withstand a gradual scaling bag of Fed's asset purchasing."

The dollar strengthened 0.1% to hover close to a one-month high versus its rivals, making gold more expensive for other currency holders.

Investors await the Wednesday outcome of the Fed's two-day policy meeting. Nearly 60% of economists in a Reuters poll said a much-anticipated taper announcement will come in the next quarter, despite a patchy recovery in the job market.

Also on the radar, U.S. monthly retail sales data due later in the day.

Recent data showing a spike in U.S. consumer prices has benefited gold as it is seen as a hedge against inflation. But, growing inflationary pressure could also force policymakers into an earlier tapering of stimulus.

"Expectations are high that the Fed would not change the script of the minutes, but recent labour market improvements and higher inflation numbers do raise the risk that the Fed will be less dovish," Avtar Sandu, senior commodities manager at Phillip Futures, said in a note.

Elsewhere, silver dropped 0.7% to $27.64 per ounce, palladium was steady at $2,749.66, and platinum slipped 0.6% to $1,158.54.

 

(Reporting by Brijesh Patel in Bengaluru, Editing by Sherry Jacob-Phillips)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Tue, June 15 2021. 09:40 IST
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