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B.and Eileen Soreng
September 20 (Reuters) – Gold hit more than five-week lows on Monday as the dollar firmed as markets watched a Fed meeting for clues as to when the bank will be scaling back its crisis-era stimulus.
Spot gold XAU = fell 0.3% to $ 1,748.69 an ounce by 0312 GMT. Prices had hit $ 1,741.86 at the start of the session, their lowest level since Aug. 12.
US gold futures GCv1 fell 0.1% to $ 1,749.00.
The dollar index = USD reached almost a month-long high, detracting from gold’s attractiveness to holders of other currencies. USD /
The market is starting to think that a reduction in the announcement may be imminent and that there may be a Hawkish surprise in the dot charts, said Stephen Innes, managing partner at SPI Asset Management.
Gold bars are viewed as a hedge against inflation and currency depreciation, which are likely caused by widespread incentives. The Fed’s throttling could address both of these conditions and make gold less attractive.
“It really looks like the markets have gotten pretty bearish in gold with some critical support levels ($ 1,780 and $ 1,750) and I think this opens up to a test of $ 1,700,” said Innes.
The Fed is expected to open the door to reducing its monthly bond purchases at its September 21-22 meeting as it pinpoints any actual change in US employment growth in September and beyond.
The central bank is also likely to issue new economic forecasts and a new assessment of officials’ interest rate expectations.
Higher rates increase the opportunity cost of holding zero-interest gold.
Elsewhere silver XAG = fell 1.2% to $ 22.13 an ounce after previously hitting its lowest level since November 2020 at $ 22.01.
platinum XPT = broke to a 10-month low of $ 907.50 and most recently fell 2.8% to $ 914.54.
palladium XPD = slipped 3.5% to $ 1,945.17.
(Reporting by Eileen Soreng in Bengaluru; editing by Devika Syamnath)
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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