Hold on gold with an eye on the Fed

Gold prices moved marginally, as investors appeared to await the Federal Reserve’s interest rate decisions before deciding on their position on the precious metal.

Specifically, the August gold contract ended trading at $1,719.1 an ounce, showing a marginal increase of less than 0.1%, having strengthened by just $1.4.

The US central bank is expected to raise interest rates by another 75 basis points in its battle to tame rampant inflation.

More than the hike, which the market has more or less discounted, investors will focus on guidance from Chairman Powell, and gold is likely to revisit its lows unless there is a shift to a more dovish approach from the bank as points out Michael Hewson of CMC Markets UK.

It is recalled that higher interest rates work competitively for the precious metal which does not offer a stable return.

Notably, gold prices have lost more than $300 since the Fed’s rapid rate hikes and the dollar’s recent rally began.

The dollar’s small retreat today, however, appeared to mobilize some holders of other currencies, leading to purchases.

In other metals, spot silver fell 0.76% to $18.46, platinum rose 0.85% to $881.08 and palladium gained 0.87% to $2,028.13.