Gold steadied near the lowest level in four weeks as investors awaited the conclusion of the Federal Reserve’s two-day meeting for clues on monetary policy.
The U.S. central bank is inching toward the start of a long road to normalizing its relationship with the rest of Washington and Wall Street. After spending the past 15 months providing unprecedented help to the federal government and investors via trillions of dollars of bond purchases, it could start preliminary discussions about scaling back that support, although actual steps in that direction are likely still months off.
Bullion’s retreat from an almost five-month high comes as investors weighed inflation pressures and possible responses by central banks. Fed officials could project interest-rate liftoff in 2023, but they won’t signal scaling back bond purchases until August or September, according to economists surveyed by Bloomberg.
“Gold is treading water ahead of today’s FOMC meeting with steady real yields and the dollar not providing much input at this time,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by email. “While no change in policy is expected, Fed officials will release of a new set of policy and economic forecasts in which they could project interest-rate liftoff in 2023.”
Spot gold was little changed at $1,859.49 at 9:53 p.m. in London. Prices slumped to $1,844.92 on Monday, the lowest intraday level since May 17. Silver rose, while platinum and palladium were little changed. The Bloomberg Dollar Spot Index fell 0.1%.
Commonwealth Bank of Australia sees a slight increase in U.S. 10-year real yields in the medium term and a weaker dollar as the global economy recovers. Rising real yields should apply slight downside pressure on gold prices, while the weaker currency should help offset that, said Vivek Dhar, a commodities analyst at the bank. Bullion could trade within a range of $1,700 to $1,900 an ounce, he said.