Gold prices hit a two-week peak on Tuesday as the U.S. dollar eased from its six-month high. Just ahead of key central bank meetings set for this week, starting with the U.S. Federal Reserve’s meeting today.
The spot gold price steadied at $1,932.32 per ounce after reaching its highest point since September 5 earlier in the day. Meanwhile, U.S. gold futures remained unchanged at $1,953.90.
A slight 0.1% dip in the U.S. dollar against other currencies made gold more accessible for international buyers. This shift in the dollar’s strength came at a crucial time, with significant central bank policy decisions on the horizon in the United States, Britain, and Japan this week.
While the expectation is for the Fed to maintain current interest rates in its announcement on Wednesday. All eyes are on their forward guidance regarding future rates.
Michael Langford, Chief Investment Officer at Scorpion Minerals, anticipates Fed Chair Powell emphasizing the persistent risk of inflation while adopting a cautious stance to monitor developments. The low global inventories of gasoline and diesel present short-term risks to achieving inflation targets. If inflation surges, maintaining control could be a challenge, impacting the appeal of non-interest-bearing gold, especially if the Fed raises rates to manage inflation.
Fed officials are cautiously optimistic about their ability to control inflation without triggering a recession. However, emerging concerns like potential autoworker strikes, a possible federal government shutdown. And mounting consumer burden due to student loan issues pose risks to the best-case scenario.