Gold Waits on Fed Rate Hike Decision
Gold prices remained steady on Tuesday as investors awaited the US Federal Reserve's interest rate decision. The precious metal had touched its lowest level in over a month on Monday but recovered to $4,300.96 an ounce by 1:57 a.m. GMT.
The Fed is set to announce its monetary policy decision at 6:00 p.m. GMT on Wednesday, with financial markets predicting a quarter-point rate hike to a range of 3.75% to 4%. Analysts believe the way Federal Reserve Chair Kevin Warsh frames the hike will be more important than the hike itself.
Market analyst Tony Sycamore said that if Warsh portrays it as the beginning of a tightening cycle, gold and risk assets would take a hit. However, if he signals a preference for a moderate pace, it could provide some support to risk sentiment and gold.
Gold often loses its appeal when interest rates rise, as higher rates increase the opportunity cost of holding a non-yielding asset. Data released on Friday showed that US consumer price growth accelerated in August, while a key measure of underlying inflation recorded its largest increase in four months.