Gold prices stayed close to $4,000 an ounce on Tuesday as investors waited for the US Federal Reserve’s interest-rate decision this week. Traders expect the central bank to keep interest rates unchanged.
A Standard Chartered analyst warned that gold needs to find a strong price level to stop further declines.
Suki Cooper, the bank’s global head of commodities research, said high oil prices were keeping inflation risks in focus. She also warned that the possibility of further interest-rate increases could weigh on gold prices, according to a note cited by Bloomberg.
The precious metal gained 0.5% in the previous session but remained under pressure as investors assessed inflation risks and the outlook for US interest rates, Bloomberg reported. However, comments from central bank officials later reduced these expectations, Bloomberg reported. Gold prices changed little after rising in the previous trading session. Oil prices fell for a second straight day as hopes for diplomatic talks eased concerns about a wider US-Iran conflict. Meanwhile, stock markets were expected to rise as interest in artificial intelligence (AI) stocks returned after a selloff last week. Expectations about the Federal Reserve’s next interest-rate move have changed over the past month. Investors first expected the Federal Reserve to raise interest rates in October after new data showed that inflation was higher than expected. The US dollar also rose slightly. The Bloomberg Dollar Spot Index, which measures the dollar against a group of major currencies, moved higher.
Because gold is bought and sold around the world in US dollars, Bloomberg reported, changes in the dollar can affect gold prices.
