Gold futures edged lower on Tuesday, sticking to a tight trading range as investors await the outcome of the Federal Reserve’s two-day meeting on monetary policy.
The precious metal gold is “losing its mojo as traders are hesitant to place any big bets ahead of the Fed meeting,” said Naeem Aslam, chief market analyst at AvaTrade, in market commentary.
The two-day Fed meeting, which concludes Wednesday afternoon, is expected to see policy makers maintain their stance that they can wait until 2024 for U.S. interest rate increases, and say that it is too early to even start talking about tapering its $120 billion per-month in asset purchases, otherwise known as quantitative easing. QE tends to pressure the U.S. dollar and can lead to inflation. Gold can benefit from a weaker dollar, and is often seen as a hedge against inflation.
“What traders are concerned about is the pace of their asset purchase program, as there is some evidence of those purchases losing some momentum,” said Aslam.
Gold for June delivery
During the press conference that follows Wednesday’s meeting, Fed Chairman Jerome Powell “is not expected to rock the boat either regarding interest rate expectations or by focusing too heavily on the recent rise in yields,” said Sophie Griffiths, market analyst at Oanda, in a note.
“Investors will be listening closely for hints regarding the recovery in employment or any rise in inflation. A more upbeat-sounding Fed could see the precious metal ease lower,” Griffiths said.
A rise in U.S. consumer confidence put some pressure on prices Tuesday for haven gold. The index of consumer confidence climbed to 121.7 this month from a revised 109 in the prior month, the Conference Board said Tuesday.