Investing.com – Gold firmed its footing in $1,200 territory on Tuesday as traders sold the dollar after fully factoring in expectations of a Federal Reserve rate hike in the next 24 hours.
The Fed held the first of its two-day policy meeting for September amid market bets that there was a of the central bank announcing on Wednesday a , the third for the year.
for December settled barely changed, up 0.05%, or 70 cents, at $1,205.10 a troy ounce on the Comex division of the New York Mercantile Exchange. While month-to-date gains for gold are modest at under 0.5%, September would be the first positive month for the precious metal since March.
“Open interest in gold shows lots of short covering,” George Gero, precious metals analyst at RBC Wealth Management in New York, said, adding that the dollar, conversely, was being sold on the notion that the rate hike had been fully factored into the market.
The , which measures the greenback against a basket of six major currencies, slid 0.1% to 93.75 by 2:09 PM ET (18:09 GMT)
Fed rate hikes typically boost the dollar and raise the cost of ownership for gold and other commodities priced in the currency. Higher interest rates also increase bond yields, making non-interest-bearing gold less attractive to investors.
The dollar was unable to rebound on Tuesday, despite data showing at 18-year highs in September, helped by a strong economy and robust job growth.
Some believe gold has also reverted to its original role as a safe haven amid the that was threatening global growth through the counter-tariffs put up by the two nations.
Prices of the yellow metal looked likely to remain rangebound until after Wednesday, when the U.S. central bank is expected to raise interest rates by a quarter point and offer some clues on the future path of monetary policy.
Among other precious metals, Comex for December edged up 1.2% to $14.51 a troy ounce. January fell by 0.6% to $827.40, while for December rose 0.2% to $1,053.60.
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Source: Investing.com
