(Bloomberg) — Gold was on track for a third straight month of gains due to strong central bank and haven demand, as the focus turned to this week’s Federal Reserve rate-decision meeting at which policymakers are expected to strike a hawkish tone.
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Bullion was trading steady at around $2,330 an ounce in early Asia hours — and was up nearly 5% for the month — ahead of the Federal Open Market Committee decision on Wednesday. Officials are seen making a hawkish pivot following hotter-than-expected inflation data in recent months, with the possibility that the central bank may be forced to backtrack from Fed Chair Jerome Powell’s hints of swifter rate cuts back in December.
Swaps traders are now pricing for the Fed to deliver at most two cuts by the end of the year — the fewest number of expected reductions since November 2023. Higher rates are typically negative for gold as it doesn’t pay interest.
Despite the timeline for expected Fed cuts being pushed back, the precious metal has climbed more than 13% this year amid strong central-bank purchases, robust demand from Asian markets especially China, and elevated geopolitical tensions from Ukraine to the Middle East.
Bullion has also seen some support in recent days from a weaker US dollar, which slumped on Monday after the yen surged amid speculation the Japanese government intervened to support its beleaguered currency for the first time since 2022. Any further action could weigh on the greenback — making bullion more attractive to investors as the metal is priced in the currency.
Spot gold was little changed at $2,334.96 an ounce at 9:27 a.m. in Singapore. The Bloomberg Dollar Spot Index was up 0.1% after falling 0.4% on Monday. Palladium slipped, while platinum and silver were steady.
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