Gold prices continued to trade in a narrow range, on Tuesday as investors refrained from placing large wagers ahead of a U.S. Federal Reserve meeting that is anticipated to result in an increase in interest rates. Gold futures increased 0.6% to $1,687.85 per ounce , while spot gold increased 0.2% to $1,679.14 per ounce. Both instruments have made just little movements since Monday, following last week’s significant declines.Tuesday’s decline in the U.S. dollar reduced the pressure on gold a little bit.
In contrast, U.S. Treasury yields increased ahead of the Fed’s announcement on interest rates, while the dollar remained anchored above 20-year highs. Although traders have also factored in the likelihood of a surprise 100 bps increase, the central bank is widely expected to raise rates by 75 basis points bps on Wednesday. After data this week indicated that U.S. inflation stayed at around 40-year highs in August, expectations for a strong raise by the Fed were solidified. The reading had increased the value of the dollar and caused metal markets to experience prolonged losses.
Gold has fallen from highs reached at the start of the Russia-Ukraine war as a result of many rate increases by the Fed, and it is currently trading at a lower level for the year. Recently, gold prices dropped below $1,700, which was thought to be one of the last levels of support before a more precipitous collapse.
On Tuesday, prices for other precious metals increased as well, with silver and platinum futures also rising after previous declines. Copper prices among industrial metals increased 0.2% to $3.5323 per pound. But recent pressure from the U.S. dollar was also wrecking havoc on the red metal. Despite anticipated supply interruptions caused by a strike at Chile’s Escondida copper mine, signs of slowing global economic growth have made copper prices look less promising this year.