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Gold edges down ahead of Fed decision
On Wednesday, gold went down in Asia trade ahead of the Federal Reserve decision on the interest rate. Market participants are waiting for clues about the tempo of further tightening of the US monetary policy in 2018.
Gold futures went down by 0.08% on the Comex exchange demonstrating a reading of $1298.30 an ounce.
Traders are currently focused on a two-day gathering of the Federal Committee for Open Market Operations to be concluded on Wednesday.
Many traders hope that the main US financial institution will have interest rates increased for the second time in 2018, and financial markets are awaiting clues that will make it clear whether the Fed is going to lift the interest rate 3 or 4 times this year.
Meanwhile, the evergreen buck proceeded with the upward movement that started on Thursday. Reflecting the actual strength of the greenback versus a bunch of key currencies, the US dollar index headed north by 0.06% coming up a reading of 93.
Yesterday, demand for the number one precious metal edged down, and market participants shifted to the evergreen buck as well as more risky assets after the upbeat outcome of the long-awaited meeting between American President Donald Trump and North Korean dictator Kim Jong-no. They both signed an important document telling that American president is obliged to provide security guarantees for North Korea in exchange for 100% denuclearization of the Korean peninsula.
By the way, assets, whose actual value is denominated in US dollars, turn out to be sensitive to the dynamics of ups and downs of the greenback. Strengthening of the US currency makes gold less affordable for those investors who hold foreign currency and, it also diminishes the demand for this non-ferrous commodity.
Silver futures went down by 0.2% being worth $16.855 an ounce.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.