Gold remains under pressure ahead of Fed’s decision

Ani Salama FXStreet

Gold prices fell on Tuesday as expectations of a rate hike by the Fed continued to weigh on the metal.

Gold was trading at $1,158 an ounce, not far from the lows of $1,152 set on Monday, the weakest since early February. Gold is off nearly 10% since the Nov. 8 election amid prospects of fiscal stimulus under Trump’s administration which might lead to faster pace of monetary tightening.

The Federal Reserve will announce its monetary policy decision on Wednesday, with a 25 bps rate hike broadly expected. However, focus could be on the wording and the “dot plot”, looking for signs of the bank's’ next move.

Gold remains very sensitive to rate hike expectations, as they tend to lift the greenback and weigh on dollar-priced metals. Meanwhile, in an environment of low interest rates investors are less attracted to bonds (and the greenback), lifting appeal for no-yielding gold and vice versa.

Author

Ani Salama

FXStreet

Ani Salama is an Economist specialized in financial markets and statistics analysis. In 2010, she joined FXstreet where she now contributes with the news section.

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