Gold struggles for direction ahead of US Fed decision

Gold prices flitted in a tight range on Tuesday (Jan 30) ahead of the United States central bank’s verdict on rates and comments from chair Jerome Powell for clarity on the timing of easing monetary policy, though a weak US dollar and lower bond yields lent support.

Spot gold held its ground at US$2,030.90 per ounce by 0143 GMT.

US gold futures rose 0.3 per cent to US$2,022.90.

The US dollar index weakened 0.2 per cent, which generally makes gold more attractive to other currency holders. Yields on benchmark US Treasury notes held near a two-week low.

Markets widely expect the US Fed to stand pat on rates at its two-day policy meeting that starts later in the day, but attention will largely be on comments from Powell on Wednesday.

Traders are betting on five quarter-point rate cuts for 2024 in the US, with the first of those arriving at a coin flip chance in March, according to LSEG’s interest rate probability app IRPR.

A Reuters poll showed on Monday that uncertainty about the economy and US interest rate cuts could drive record gold prices in 2024.

Lower interest rates decrease the opportunity cost of holding bullion.

However, analysts and traders have downgraded their price forecasts for platinum and palladium in 2024 as demand struggles to rise significantly, but they still expect prices for both to rebound from current levels.

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Spot silver edged 0.1 per cent lower to US$23.17 per ounce, platinum fell 0.2 per cent US$924.66, and palladium dropped 0.3 per cent to US$980.14. REUTERS