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Metals Stocks: Gold prices edge up, attempt to halt 3-session skid ahead of Fed update

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Gold futures rose modestly on Wednesday, aiming to snap a three-session slump, ahead of a policy update from the Federal Reserve due later in the session, which could set the tone for financial markets over the next few months.

The Fed will release an updated policy statement and its projections for interest rates, known as the dot plot, at 2 p.m., a half-hour after precious metals settle on Comex. A news conference will be held by Fed Chairman Jerome Powell at 2:30 p.m.

Gold futures so far this week, are down over 1%, as commodity investors await the Fed’s outlook for inflation, which has shown evidence of surging in the U.S. in the recovery phase from the COVID pandemic.

Many participants expect that spiking inflation may prompt the Fed to at least begin early stage discussions about rolling back some features of its pandemic-era accommodations, including tapering its asset-purchases of $80 billion in Treasurys and $40 billion in mortgage-backed securities monthly.

“Heading into this Fed meeting a ton of dovishness has already been priced in so many gold traders have been quick to lock in profits,” wrote Edward Moya, senior market analyst at Oanda, in a Wednesday note.

“Gold volatility will remain elevated throughout the initial reaction and days post-Fed. The Fed will likely remain in wait-and-see mode with both inflation and the labor market recovery for the next few months and that should be supportive for inflows into gold,” he speculated.

At last check, gold for August delivery
GCQ21,
+0.13%

GC00,
+0.13%

was up $1.40, or less than 0.1%, at $1,857.80 an ounce, following a 0.5% drop on Tuesday. A decline for bullion on Wednesday would match its longest string of losses since the period ended April 30.

Moves for metal prices come as China’s National Food and Strategic Reserves Administration, said Wednesday that it planned to release copper, aluminum, zinc and other national reserves in batches in the near future to ensure the supply and price stability of bulk commodities.

July copper
HGN21,
+0.20%

was up 0.3% at $4.333 a pound on Wednesday, after putting in a 4.3% decline to end Tuesday trade.

In other economic news, U.S. housing permits dropped 3% in May to 1.68 million yearly pace, while starts climbed 3.6% to 1.57 million annual rate. April U.S. housing starts were lowered to 1.52 million from 1.76 million. U.S. import prices rose 1.1% in May—and were up 0.9% minus fuel—contributing to an 11.3% in the past 12 months.

Economic Report: Import prices shoot up in May to highest level since 2011 and add to mounting U.S. inflation

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