Gold Steady After Rally As Traders Look Toward Fed Meeting
Gold held gains after bouncing back above $1,700 an ounce, spurred by a falling dollar as traders examined the latest Federal Reserve comments for indications on the magnitude of its forthcoming interest-rate hikes.
(Bloomberg) -- Gold held gains after bouncing back above $1,700 an ounce as traders examined the latest Federal Reserve comments for indications on the magnitude of forthcoming interest-rate hikes.
Bullion rallied 1% on Wednesday after dipping below $1,700 -- a threshold rarely breached since the start of the pandemic in 2020. That rebound came as a gauge of the greenback’s strength fell from an all-time high. Still, interest rate increases look set to continue in most major economies, apart from China.
US Federal Reserve Vice Chair Lail Brainard said Wednesday monetary policy would “need to be restrictive for some time” in order to tame inflation. The central bank will meet on Sept. 20-21, with a three-quarter point interest rate hike widely predicted.
“Gold’s demand due to its safe-haven attribute is valid, although the focus of investors has been glossed over by strength in the dollar and U.S. Treasury yields, which have weighed heavily on gold prices over the past month,” said Avtar Sandu, senior manager of commodities at Phillip Nova. Strong U.S. economic data and hawkish signals from the Fed drove up expectations of more sharp interest rate hikes, he said.
Spot gold edged higher to $1,719.28 an ounce at 10:20 a.m. in London, up from a low of $1,691.50 on Wednesday. The Bloomberg Dollar Spot Index rose 0.1%, after dropping 0.4% the day before. Silver, platinum and palladium all gained.
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