As investors anticipated a pause in interest rate increases by the Federal Reserve at its policy meeting this week, with a focus on the U.S. central bank’s rate outlook, gold prices nudged up on Monday.
By 0256 GMT, spot gold increased 0.2% to $1,928.19 per ounce. Futures for U.S. gold increased 0.2% to $1,949.30.
Ahead of policy announcements by the Fed on Wednesday, the Bank of England on Thursday, and the Bank of Japan on Friday, investors found gold to be more appealing as Asian shares declined.
“Gold was making some moves to the upside to start the week on some safe-haven buying, with the upcoming economic calendar containing plenty of possible central bank event-risk,” stated Tim Waterer, chief market analyst at KCM Trade.
The conditions have been set for a fresh batch of forecasts from Fed officials this week, which are likely to reflect their increased confidence in the prospects for an economic soft landing. These conditions include faster growth, lower inflation, and a labour market that won’t quit.
They will probably still leave enough for one more rate increase, though.
With no dividend, gold typically loses appeal to investors when interest rates increase.
In the week ending September 12, COMEX gold speculators reduced their net long position by 16,544 contracts, according to data released on Friday.
In fact, the story about a gentle landing and higher rates for longer decreased investor interest in yellow metal, according to a weekend analysis from TD Securities.
The positive CPI and retail sales statistics only strengthened this argument, indicating that the bulls will have to wait for another positive event.
Last week, Chinese gold prices reached new highs, continuing a months-long uptrend as investors bought the safe-haven asset to counteract the weakening yuan. The premiums on physical gold also reached unprecedented heights.
Spot prices for silver increased by 0.8% to $23.19 an ounce, platinum increased by 0.4% to $928.66, and palladium remained unchanged at $1,248.50.