BENGALURU: Gold prices drifted lower on Wednesday as the US dollar firmed, while traders awaited the US Federal Reserve’s monetary policy decision and Fed Chair Jerome Powell’s remarks for more clues on prospects of rate cuts.
Spot gold dipped 0.2% to $2,152.88 per ounce by 1210 GMT. Gold has fallen 2% from a record high of $2,194.99 hit on March 8, as last week’s hotter-than-expected US consumer prices index figures dashed hopes for early and sharp rate cuts.
“We had an incredible rally in gold in early March, so gold drifts a little bit lower as markets are focusing again on timing of expected rate cuts,” said David Wilson, commodities strategist at BNP Paribas. “That rally was a bit overdone, because the US data remains stronger than expected.” Traders are currently pricing in a 55% chance of a rate cut in June, according to the CME FedWatch Tool. The start of a rate-cutting cycle would support precious metals as non-yield-bearing assets.
The dollar edged up ahead of the Fed verdict, making gold more expensive for holders of other currencies. Gold has so far managed to hold above key support level of around $2,135, preventing long liquidation from funds, who in a two-week period to March 12, bought 9.1 million ounces of gold via futures, said Ole Hansen at Saxo Bank.
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