Spot Gold edged lower on Monday, as the US Dollar remained firm near a two-week high of 103.514 ahead of a host of major central bank policy meetings this week.
The Federal Reserve is largely expected to keep interest rates on hold on Wednesday, while investor attention will firmly be on Fed Chair Jerome Powell’s remarks for hints regarding rate outlook, especially as inflation remains sticky.
Markets are pricing in about a 56% chance of a Fed rate cut occurring in June.
Lower interest rates reduce the opportunity cost of holding Gold.
“A fairly hawkish outcome from the Fed has been baked in… it shows a fairly strong consensus that there might only be one or two cuts this year,” Kyle Rodda, financial market analyst at Capital.com, was quoted as saying by Reuters.
“If we get a less hawkish outcome from the Fed, there’s every reason that we will see a weaker dollar, lower yields, and that could just fuel a rally and provide some fundamental impetus and then you are looking at $2,200 levels.”
Additionally, the Bank of Japan is expected to exit its ultra-accommodative monetary policy at the conclusion of its meeting tomorrow, while the Bank of England is expected to keep rates on hold on Thursday.
As of 8:00 GMT on Monday Spot Gold was edging down 0.22% to trade at $2,151.27 per troy ounce.
Gold Futures for delivery in April were edging down 0.32% on the day to trade at $2,154.65 per troy ounce.
Elsewhere, Silver Futures for delivery in May were down 0.50% to trade at $25.255 per troy ounce.
The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was inching down 0.04% to 103.407 on Monday.
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