Gold price holds 2-month high ahead of Fed announcement

Gold prices retreated but still held near a two-month high on Wednesday, as investors await the outcome of a US Federal Reserve meeting that may offer more clues on the outlook for monetary policy tightening.

Spot gold declined 0.8% to $1,833.15/oz by noon EDT, its highest since mid-November. US gold futures fell 1.0%, trading at $1,832.70/oz in New York.

Later in the day, Fed chair Jerome Powell and his fellow policymakers are expected to signal their first interest-rate hike since 2018, setting the stage for a March move to cool inflation.

The Federal Open Market Committee is all but certain to hold its benchmark rate near zero after the two-day meeting ending Wednesday, while sticking to a plan to end its bond-buying program in March.

Bullion has risen more than 4% since the end of November amid headwinds in equity markets as investors hone in on the possibility of an error by the Fed. The risk of a Russian invasion of Ukraine and a cut in the International Monetary Fund’s world economic growth forecast for this year are also aiding the safe haven asset.

Gold Bar by Sprott Money is licensed under CC BY 2.0

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