Gold Pressured by Dollar, Market Awaits Fed Decision
Gold prices weakened on Tuesday (July 28th) as the US dollar held near a one-month high. Spot gold fell 0.7% to US$4,048.40 per troy ounce, while US gold futures weakened to US$4,049.10.
The strengthening dollar made gold more expensive for buyers using other currencies. This weakening occurred after the precious metal posted slight gains in the previous two trading sessions.
The market generally expects the Federal Reserve to keep interest rates unchanged at the conclusion of its meeting on Wednesday. However, market participants still price in around a 40% chance of a rate hike this week and an 80% chance that tightening could occur in September.
Investors are also reducing exposure ahead of the release of second-quarter US economic growth and core PCE inflation data. Gold prices are expected to remain within a narrow range until the market receives clearer clues from the Fed's decision and a statement by Fed Chairman Kevin Warsh.
Market Impact
Pressure on gold could potentially continue if the Fed signals a hawkish stance or opens the door to further interest rate hikes. Conversely, gold could strengthen again if the central bank maintains its policy stance and expresses concerns about an economic slowdown. A strengthening dollar and rising US bond yields remain the main risks to gold's movement.
Source: Newsmaker.id
