Investors steer clear of big positions ahead of the US Federal Reserve’s interest rate decision, which could influence the outlook for bullion
Bengaluru — Gold prices were little changed on Wednesday, as investors stayed away from taking big positions ahead of a US Federal Reserve interest rate decision that could influence the outlook for bullion.The US central bank is widely expected to raise interest rates by another 75 basis points at the conclusion of its policy meeting on Wednesday, as it attempts to tame runaway inflation without triggering a recession.
Higher interest rates and bond yields increase the opportunity cost of holding non-yielding bullion. Benchmark US 10-year treasury yields firmed, while the dollar eased after a sharp rise on Tuesday, increasing the greenback-priced gold’s appeal among buyers holding other currencies. “Interest rate rises will continue for the next three months. This will put downward pressure on gold prices and should see gold break below $1,700/oz. The key reason for this is the ongoing flow of funds to the dollar,” Langford said.
Meanwhile, US consumer confidence dropped to the lowest in nearly one-and-a-half years this month amid persistent worries about increasing inflation and higher interest rates, which could undercut spending, pointing to slower economic growth at the start of the third quarter. The global economy is in the grips of a serious slowdown, with some key economies at high risk of recession and only sparse meaningful cooling in inflation over the next year, according to Reuters polls of economists.
Spot silver dipped 0.1% to $18.61/oz, platinum fell 0.3% to $870.77, and palladium firmed 0.5% to $2,019.91.
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