Gold was near a two-year low as investors positioned themselves for a significant rate hike from Wednesday’s Fed meeting.
Gold continued to hover near a two-year low as investors prepared for a significant rate hike by the Fed.
Spot gold has been under pressure for the week after the dollar rallied on inflation-adjusted bond yields. The precious metal, which spent the first half of the month above $ 1700, continued its decline after falling below this level last week.
“Gold prices have consolidated for a week as traders try to position themselves for a rising interest rate environment, while confidence has reached a sluggish level in a falling market,” Avtar Sandu, Philip Nova Senior Commodities Manager, said in a memo.
Investors await the Fed’s final tightening action on Wednesday. The central bank is expected to raise rates by 100 basis points, triggering further declines in the non-interest-bearing precious metal. Gold has lost around 20 percent from its highest level in March this year.
In their past notes, Citigroup analysts, including Aakash Doshi, stated that the spot gold markets could bottom out in September or October, and prices could rise to an average of $1775 in the fourth quarter while saying that this is a low probability in the base scenario. Analysts added that increased recession risks could cause a price recovery, but a rise above $1900 seems unlikely until 2023.
