Gold bugs Wait On U.S Federal Reserve Bank

The yellow metal showed some sign of stability in the early hours on Wednesday amid cautious bias ahead of the U.S. Federal Reserve policy decision for insights over when the Apex bank adopt monetary tightening measures.

On Tuesday, gold futures traded near the $1,800 price band. The dollar, which usually moves inversely to gold, inched slightly up.

Still, the greenback remained just below recent highs and has been rising broadly for more than four weeks.

On Wednesday, the central bank will announce its policy decision following a two-day meeting. The U.S Federal Reserve Bank is likely to confirm a strong U.S. recovery and plans for an eventual policy shift amid the resurging viral attacks.

Gold bugs are cautiously placing their bet as the demand for the bullion asset in India, posted patchy outcomes during the past week as price swings deterred buyers.

Despite the dollar’s steep drop in June, the precious metal is on the mend after its worst month since 2016. The dollar’s fall was sparked by the Fed’s signal that interest rates could rise earlier than anticipated to combat inflation.

Since COVID-19, global central banks and governments have pumped money into the bullion market, but vaccines and the reopening of markets have reduced demand for gold as a reserve.

At the crucial meeting, the Fed will discuss its plans for bond purchases and its attitude toward rising inflation an issue that may have an impact on currency markets globally.

The market expects Jerome Powell to show more patience than most recent Fed speakers when it comes to lowering inflation, as long as labor market conditions remain weak, which would keep gold bugs between $1788 -$1850 an ounce until there is a clear catalyst for a breakout.