Gold prices drifted lower on Tuesday as the U.S. dollar firmed, while investors await remarks from U.S. Federal Reserve Chair Jerome Powell scheduled to speak after the central bank's policy meeting wraps up on Wednesday.
March 19 (Reuters) - Gold prices drifted lower on Tuesday as the U.S. dollar firmed, while investors await remarks from U.S. Federal Reserve Chair Jerome Powell scheduled to speak after the central bank's policy meeting wraps up on Wednesday.
Spot gold fell 0.3% at $2,153.19 per ounce as of 1222 GMT, hovering near its lowest levels in a week hit on Monday. U.S. gold futures eased 0.4% at $2,156.70.
The dollar gained 0.5% and hit a more than two-week high, making gold more expensive for other currency holders.
"With the FOMC meeting approaching and some concern of a more hawkish FOMC statement, with the dots eventually indicating less rate cuts this year, some market participants prefer to hold a more cautious stance by reducing their (gold) holdings," said UBS analyst Giovanni Staunovo.
Markets widely expect the Fed to stand pat on rates at its two-day policy meeting that starts later in the day, but attention will largely focussed around comments from Powell on updated interest rate projections due on Wednesday.
Gold prices fell 1% last week after data showed that U.S.
consumer prices increased solidly in February and
producer prices rose more than expected, reducing hopes around early Fed rate cuts.
Higher interest rates reduce the appeal of holding non-yielding gold. Traders are currently pricing in an about 59% chance of a Fed rate cut in June, according to the
CME FedWatch Tool, opens new tab.
"Renewed gold demand via ETFs from financial investors and ongoing solid demand from central banks should allow gold to reach a new record high of USD 2,250/oz at the end of the year," Staunovo said.
Meanwhile, the Bank of
Japan (BOJ) ended its eight years of negative interest rates and other remnants of its unorthodox policy.
Spot silver fell 0.6% to $24.88 per ounce, platinum lost 1.5% to $899.55, palladium slipped 3.4% to $996.62.
