Investing.com – Gold prices slipped in Asia on Tuesday as the dollar edged up ahead of the start of a two-day FOMC meeting with rates seen steady, but views on inflation expected to have an impact on the market.
Gold futures for February delivery on the Comex division of the New York Mercantile Exchange fell 0.12% to $1,338.70 a troy ounce. The rose 0.01% to 89.18.
Overnight, gold prices fell on Monday in the wake of a sharp move higher in the dollar amid investor expectations that solid economy growth and faster inflation would strengthen the Federal Reserve’s case for a more aggressive approach to monetary policy.
Goldman Sachs (NYSE:) said it expects the Federal Reserve bank to adopt a slightly hawkish slant in its commentary related to economic conditions and inflation, when the central bank releases its policy statement due Wednesday.
That stoked investor expectations for a more hawkish outlook on US rates, sending yields soaring while boosting the greenback, pressuring gold to session lows. Markets have priced in three rate hikes this year, the first of which is widely expected in March.
Dollar-denominated assets such as gold are sensitive to moves in the dollar – a rise in the dollar makes gold more expensive for holders of foreign currency and thus, reduces demand.
Sentiment for gold remains bullish, however, as data showed traders continued to increase their bullish bets that gold would extend its recent rally.
The most recent Commitment of Traders (CoT) report showed money managers increasing their speculative gross long positions in Comex by 8,630 contracts to 236,003.
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