Gold steadies ahead of Fed decision, copper cools from China boost
Investing.com-- Gold prices kept to a tight range on Wednesday before the conclusion of a Federal Reserve meeting later in the day, while copper prices pulled back slightly after vows of more Chinese stimulus sparked strong gains.
Bullion prices see-sawed this week amid uncertainty over the Fed meeting. While the central bank is widely expected to raise interest rates by 25 basis points (bps) later in the day, markets remained wary of the bank signaling any more rate hikes for the year.
Gold marked a strong recovery over the past month as weak U.S. economic data, particularly inflation, spurred bets that the Fed will have limited headroom to keep raising interest rates.
But this rebound stalled in recent sessions, as uncertainty grew before the Fed meeting.
Spot gold was flat at $1,965.56 an ounce, while gold futures expiring in August rose 0.2% to $1,966.75 an ounce by 20:18 ET (00:18 GMT).
While a 25 bps hike appeared to be largely priced in by markets, with the dollar rising in recent sessions, the Fed’s stance on future rate hikes remained uncertain.
The central bank had signaled at least two more rate hikes this year, given that inflation was still trending well above the bank’s annual target.
But Fed Fund futures prices indicate that markets are pricing in a greater possibility that Wednesday’s hike will be the Fed’s last for the year, even though the central bank has given no such indication.
Higher rates bode poorly for non-yielding assets such as gold, given that they increase their opportunity cost. Gains in gold are still expected to be limited, with U.S. rates set to remain higher for longer.
Beyond the Fed, the European Central Bank (ECB) and the Bank of Japan (BOJ) are also set to decide on their
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