The gold price dropped on Wednesday afternoon and looks vulnerable ahead of the conclusion of the Federal Reserve’s two-day meeting this evening.
Spot gold was last at $1,175.80/1,176.50 per ounce, down $5.50 on Tuesday’s close and close to intraday lows of $1,174.70. It peaked at $1,182.60 earlier. Silver was up four cents at $16.01/16.06, however.
Investors are positioning themselves ahead of the Federal Reserve’s monthly monetary policy statement, which may give clues as to when it may raise interest rates. While the central bank is not expected to tighten monetary policy this time, it could change the language in its statement, potentially boosting volatility in quiet currency markets. The dollar was last effectively unchanged for the session at 1.1246 against the euro.
Many will also be looking for signs that the Fed could lift rates twice this year, Commerzbank noted this morning, which “could cause the US dollar to appreciate noticeably”.
A stronger dollar might put downward pressure on the gold price, which is not far above three-month lows hit earlier in June at $1,162.60.
Fed chair Janet Yellen is seen focussing on the growing number of signals that the slowdown in economic growth in the first quarter has not spread into the second.
Platinum continued to struggle – the metal hit another six-year low at $1,072, reflecting the weakening gold price and fundamental issues. It was last at $1,070/1,075 per ounce, down $5; its discount to gold exceeds $100.
Palladium is also starting to look vulnerable, trading at its lowest since March 31 and looking susceptible to falling to its lowest in more than a year if it drops below $724.
(Editing by Mark Shaw)
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