Gold held steady on Tuesday as investors stayed on the sidelines ahead of the U.S. Federal Reserve policy meeting this week, which could offer further clues on the timing of likely interest rate cuts this year.
Spot gold was up 0.1% at $2,161.79 per ounce, as of 0237 GMT. U.S. gold futures edged 0.1% higher to $2,165.30.
With the Fed widely expected to hold rates steady at the end of its two-day monetary policy meeting on Wednesday, the market is awaiting policymakers’ updated economic and interest rate projections.
“Gold is staying above the $2,150/oz support level and as long as it can stay above that level, gains could be in store in the short term depending on what tone gets delivered by Fed Chair Jerome Powell this week,” said Tim Waterer, chief market analyst at KCM Trade.
“If the Fed focuses on recent CPI, PPI numbers and ongoing labour market strength, we could see some of those hopes to rate cuts doused, in which case we could see gold sort of dip below that support level and edge lower in the short term.”
Gold prices fell 1% last week after data showed that U.S. consumer prices increased solidly in February and producer prices rose more than expected, reducing hopes around early Fed rate cuts.
Higher interest rates reduce the appeal of holding non-yielding gold. Traders are currently pricing in an about 51% chance of a Fed rate cut in June, compared with 56% on Monday, according to the CME FedWatch Tool.
Apart from the Fed, central banks in Japan, England, Australia, Norway, Switzerland, Mexico, Taiwan, Brazil and Indonesia are also meeting this week, with most expected to stand pat on rates.
Spot silver gained 0.4% to $25.13 per ounce, platinum eased 0.3% to $915.60, palladium slipped 0.8% to $1,024.16.
