© Reuters. Amber Warwick
Investing.com — Gold prices fell on Tuesday. Broader metals markets have also fallen under pressure from a stronger dollar as caution mounts ahead of this week’s meeting of the Federal Reserve Board.
The yellow metal signaled a slow start to the week ahead of Wednesday, when banks are widely expected to raise interest rates by 25 basis points.
However, the outlook for monetary policy will be a key focus, as recent economic data from the US suggests there may be enough room for the central bank to raise interest rates further.
By 18:59 ET (23:59 GMT), it had fallen 0.1% to $1,922.10 per ounce, but was held back around $1,921.75 per ounce.
Spot prices exceeded futures prices ahead of the expiry of futures contracts, indicating that near-term demand for gold remains strong.
Yellow metals have seen a nice rally in late 2022 and early 2023 as lower US inflation boosted expectations of a gradual Fed rate hike in 2023.
But the market remained uncertain about where U.S. borrowing rates would peak given inflation was still well above the Fed’s annual target. It warned that higher interest rates could continue for a long time.
The week saw a recovery against a basket of currencies, putting some pressure on the metals market as well.
The combination of rising interest rates and high inflation is expected to weigh on economic growth this year, increasing the risk of recession in major economies. Gold has also benefited from the safe haven demand for the concept.
A fourth quarter out of the Eurozone, due later in the day, is also expected to shed further light on the recessionary outlook. However, in anticipation of a Fed meeting, investors shifted to the dollar as a safe haven asset.
It remained flat at $1.017.15 per ounce before declining 0.3% to $23.668 per ounce.
Among industrial metals, a stronger dollar and fears of a recession pushed copper prices down.
It was flat around $4.1833 per pound after dropping more than 1% in the previous session.
The price of red copper received little support from the prospect of supply disruptions from Peru, the world’s second largest copper producer, which is facing growing civil unrest after the ouster of President Pedro Castillo.
