A gloomier assessment of the US economy by the Fed buoys gold

GOLD prices started the week on a stronger note, buoyed by a weak dollar and dovish expectations from the Fed. The benchmark Comex GC August contract had last Friday touched lows last seen in April as gold ended last week on a weak note. Support for gold this week came as it looked ahead on dovish expectations that the US Federal Reserve would continue to have accommodative policies, at its meeting on Wednesday.

The US Dollar Index traded on a weak note and was supportive of gold. Wall Street stocks were softer as risk appetite took a back seat with cautious investors awaiting clarity on the economy.

Gold prices rallied mid-week after the Federal Open Markets Committee projected that the fed funds rate would remain near zero through 2021. Precious metals rallied after the Fed released its statement and held onto its pledge to ease the economic pain from the coronavirus pandemic, boosting bullion's safe-haven appeal. The dollar slid to a three-month low after the Fed projected a more sluggish US economic recovery than the market expected.