Gold scales 2-week peak as focus turns to Fed meeting

GOLD PRICES climbed to a twoweek high on Tuesday, supported by a softer dollar and lower Treasury yields while focus turned to the US Federal Reserve’s policy meeting for insight into how soon it will cut interest rates this year.

Spot gold was up 0.2% at $2,035.32 per ounce by 12:09 p.m.(1709 GMT), after hitting its highest since Jan. 16 earlier in the session. US gold futures rose 0.5% to $2,034.20.

The dollar index fell 0.2%, making gold more appealing to other currency holders. The benchmark 10-year Treasury yields hit a two-week low.

Lower interest rates decrease the opportunity cost of holding bullion.

The Fed’s policy decision is due on Wednesday, having made a dovish turn in the December meeting. Markets are widely expecting the US central bank to leave rates unchanged at the end of the two-day meeting.

Fed wants to have a steady market so we may not see that many rate cuts, and Fed Chair Jerome Powell is going to be neutral and talk about the possibility of lowering interest rates, Daniel Pavilonis of RJO Futures, added.

Last week data showed moderate growth in US prices in December, keeping annual inflation below 3% for a third consecutive month and potentially allowing the Fed to begin cutting interest rates this year.

A Reuters poll showed on Monday that uncertainty about the economy and US interest rate cuts could drive record gold prices in 2024.

Spot silver fell 0.4% to $23.11 per ounce, but hit its highest level since Jan. 15 earlier in the session. Spot platinum fell 0.6% to $921.70 an ounce, and palladium lost 0.6% to $977.51.