Gold prices held in a tight range on Tuesday as investors awaited the Federal Reserve’s policy announcement this week. The US central bank is likely to raise rates aggressively to limit inflation.
At 0406 GMT, spot gold was $1,676.12 per ounce. Its futures rose 0.4% to $1,685.50.
The Fed is projected to raise interest rates by 75 basis points (bps) on Wednesday, with a 19% probability of a 100 bps hike.
Higher Treasury yields and a stronger dollar on expectations for more aggressive Fed policies have hurt gold prices, an IG market strategist said.
More aggressive policymaker predictions compared to market expectations might reflect a higher-for-longer rate stance, which could hurt gold prices.
Rising interest rates reduce the appeal of non-yielding gold bullion.
Despite a 0.2% drop, the dollar index was near a 20-year high. A stronger dollar makes bullion costlier for foreigners.
Monday was the 10-year Treasury yield’s highest level in almost a decade.
SPDR Gold Trust holdings dipped to 30,799,131 ounces on Monday, the lowest since March 2020.
Reuters technical expert Wang Tao predicts spot gold will hit $1,685 before dropping.
Silver fell 0.6% to $19.50 per ounce. Palladium decreased 2.4% to $2,172.19 and platinum 0.1% to $918.51.
