Gold prices fell on the last day of the week after the strengthening of the dollar. The Federal Reserve’s strategy to raise interest rates could set the tone for investors’ positions ahead of this week’s US inflation data, experts say.
Analysts conveyed their expectations for gold before the Fed meeting
An ounce of gold fell 0.2 percent to $1,771 as of writing. The US dollar index rose 0.3 percent, reducing gold’s appeal to overseas buyers. The precious metal traded in the range of around $1,760 to $1,790 after falling below the key $1,800 level last month as investors look to gauge how much the US central bank will cut stimulus, experts said.
The US Consumer Price Index (CPI) report on Friday will be followed by the Fed’s policy meeting on December 14-15. “If the Fed tapers earlier than they announced at the last meeting, then of course the probability of a rate hike increases and that will be a negative factor (for gold),” said Peter Fertig, analyst at Quantitative Commodity Research.
Reduced stimulus and interest rate increases tend to increase government bond yields, raising the opportunity cost of non-yielding nuggets. “However, gold may see new offers if markets once again start to fear developments related to the epidemic or escalation of geopolitical tensions between major economies,” said Han Tan, chief market analyst at Exinity. World stock markets stalled at two-week highs as measures were taken in parts of the world to contain the spread of COVID-19, including the new Omicron variant on the vaccine front.