Gold prices were steady on Tuesday morning, caught between lower bond yields and a stronger dollar, as investors watched for signs of how soon the US central bank could wind down pandemic support measures when it meets later in the day.
Spot gold was almost unchanged at $1,786.56 at 9.30 am UAE time. In the UAE, the 24K variant of the precious metal opened at Dh216.25 per gram on Tuesday morning. While 22K, 21K and 18K were trading at Dh203.25, Dh194.0 and Dh166.25 per gram, respectively.
The dollar firmed, making bullion more expensive for buyers holding other currencies, while US Treasury yields hovered near a one-week trough touched in the previous session.
Edward Moya, senior market analyst at Oanda, said it appears gold prices will remain stuck in a trading range until investors get a better idea of how high the US Federal Reserve expects interest rates to go over the next few years.
“While an accelerated taper is mostly priced in, traders should be prepared for any dovish surprises. Gold prices have not been a good inflation hedge over the past month and that is largely due to the strong dollar that has emerged from Fed hawkishness. Unless Fed rate hike expectations surge to three to four rate hikes in 2022, gold should start to grind higher,” said Moya.
“The market is largely waiting for the outcome of the Fed meeting,” said Ilya Spivak, currency strategist at DailyFX.
