Gold rises as investors await Fed rate decision
Gold inched up yesterday, after a near 1 per cent jump in the previous session, as investors awaited a US Federal Reserve rate decision later in the week, while progress in US-China trade talks curbed appetite for safe haven assets.
Spot gold rose 0.2 per cent to US$1,506.95 (S$2,052) an ounce as of 3pm. US gold futures were up 0.3 per cent at US$1,509.60 an ounce.
"All eyes are on the Fed meeting now, but what investors are really looking forward to is some clarity on whether the central bank will continue to remain dovish for the rest of this year," said Mr John Sharma, an economist with National Australia Bank.
The Fed is scheduled to meet today and tomorrow, with traders seeing a 90.4 per cent chance for a 25 basis point rate cut, according to CME Group's FedWatch tool. The US central bank has already lowered interest rates twice this year.
"Gains (if the Fed cut rates this week) may be limited as trade tensions are not as tense as they were over the summer," AxiTrader market strategist Stephen Innes said in a note.
US President Donald Trump last week said the US was doing very well in its trade negotiations with China and that China wants to make a deal "very badly". The remarks boosted investors' appetite for riskier assets, sending Asian shares to a three-month high yesterday.
However, Mr Sharma said "any development on the trade war front will just have an interim effect on gold".
He added: "The situation is far more complicated to be solved in a hurry."
Gold prices were also being weighed by a strong dollar, which makes the metal expensive for buyers holding other currencies. - REUTERS