The price of gold fell slightly during early Asian trading, affected by the rise in the dollar index, at a time when the markets are awaiting the meeting of the Federal Reserve (the US central bank) to search for clear indicators about the future path of interest rates.
Gold in spot transactions recorded a decrease of 0.1%, reaching $4,013.70 per ounce, while US gold futures contracts for December delivery fell by 0.3%, recording $4,027.10. This decline comes as a result of the rise in the dollar, which reduces the attractiveness of the precious metal priced in the US currency for buyers holding other currencies.
On the monetary policy front, policymakers at the Federal Reserve indicated that they are not intending to raise short-term borrowing costs during their meeting this week, but the persistence of inflation-related concerns reinforces investors’ belief that the temporary pause in raising interest rates will not last long.
The markets’ attention is directed towards the US Federal Reserve’s monetary policy decision scheduled to be issued tomorrow, Wednesday, followed by the release of personal consumption expenditures data on Thursday, which is the main indicator that the central bank closely follows to achieve the goal of stabilizing inflation at a rate of 2%.
In the same context, data from the CME Group’s “Feed Watch” tool indicates that traders’ expectations for raising interest rates during this week’s meeting are 11%, rising to 82% for the possibility of a hike in next December’s meeting.
It is noteworthy that gold is traditionally considered an effective hedge against inflation, but the high interest rate environment limits the appeal of the yellow metal as it is a non-yielding asset.
