Gold muted as spotlight shifts to Fed meeting

[BENGALURU] Gold prices were little changed on Tuesday (Dec 14), as cautious investors focussed on key central bank meetings this week, with the US Federal Reserve likely to accelerate its plans for the roll-back of its pandemic-era economic support measures.

Spot gold was last down 0.1 per cent to US$1,785.65 per ounce by 12.30 am GMT. US gold futures also fell 0.1 per cent to US$1,786.

The dollar, meanwhile, held firm against its rivals.

The US central bank is set to begin its 2-day monetary policy meeting on Tuesday, with investors expecting the Fed to announce wrapping up its bond purchases sooner than expected, as they look for clues on timing of interest rate hikes next year.

Apart from the Fed, the European Central Bank (ECB), the Bank of England and the Bank of Japan are also scheduled for meetings this week.

The ECB, meeting on Thursday (Dec 16), is likely to confirm that its 1.85 trillion euro (S$2.86 trillion) pandemic emergency stimulus scheme will end next March.

Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of holding bullion, which bears no interest.

US consumers' short-term inflation expectations pushed higher in November and expectations for future earnings growth dropped, according to a survey released on Monday by the New York Federal Reserve.

Wall Street ended lower overnight, as fears over the Omicron coronavirus variant weighed on investor sentiment towards riskier assets.

Spot silver dipped 0.1 per cent to US$22.29 an ounce.

Platinum was nearly flat at US$929.45 and palladium gained 0.3 per cent to US$1,686.97.

REUTERS