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Metals Stocks: Gold prices retreat with Fed policy in focus, global equities rising

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Gold futures were headed lower Wednesday morning, poised to end in negative territory for the first time in three sessions, as investors watched for the latest update on policy from the Federal Reserve, which could influence prices for precious metals.

December gold
GCZ21,
-0.31%

 
GC00,
-0.31%

fell $4.70, or 0.3%, to $1,773.50 an ounce, after rising 0.8% on Tuesday.

The Fed is scheduled to release a policy statement and projections for interest rates at 2 p.m. Eastern Time, a half-hour after trade on Comex for metals settles. That release will be followed by a news conference hosted by Fed Chairman Jerome Powell at 2:30 p.m.

The Fed could announce the timing and pace of scaling back crisis-era bond purchases, but investors will also be on the lookout for the outlook for interest-rate increases and signs that the fiscal health of China’s highly levered property developer Evergrande is giving the central bank any cause for concern about knock-on effects in the U.S. and elsewhere.

Read: With Fed officials split over outlook, Powell seeks to find compromise tapering plan

“Traders should watch today’s Fed meeting closely as any hawkish remarks by the Fed could push gold prices down as the appeal of the yellow metal would decline,: wrote Naeem Aslam, chief market analyst at AvaTrade, in a daily note.

“Furthermore, any aggressive move by the central bank to change the policy rate will also adversely affect the precious metal as the opportunity cost of holding gold would rise and investors will prefer having exposure to riskier assets to earn higher returns,” Aslam wrote. 

See: Fed could fracture in 2022 over when to raise interest rates, economist says

Meanwhile, the Bank of Japan on Wednesday confirmed that it would stick to an ultraeasy monetary policy as it wrestles with COVID-19 outbreaks caused by the delta variant.

Need to Know: Here’s the big challenge confronting the Fed — and it’s not the taper

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