Prior to an expected Fed rate delay, gold prices were increasing

As investors priced in a pause in interest rate increases by the Federal Reserve during its policy meeting this week, with a focus on the U.S. central bank’s rate outlook, gold prices nudged higher on Monday. The price of spot gold increased 0.2% to $1,928.19 per ounce. American gold futures increased 0.2% to $1,949.30.

Ahead of the 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. 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 labor 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.

As buyers flock to the safe-haven asset to counteract the weakening yuan, Chinese gold prices reached new highs last week, continuing a months-long surge. Also reaching record highs were physical gold premiums. Silver prices on the spot market increased by 0.8% to $23.19 an ounce, platinum increased by 0.4% to $928.66, while palladium was unchanged at $1,248.50.

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