Gold Loses Shine as Dollar Strengthens Ahead of Fed Meeting

London: 19 March 2024 (TraderMade): Gold prices dipped today as the US dollar firmed up, with investors turning cautious before this week's crucial Federal Reserve meeting.

Key Takeaways

• Gold price fell around 0.3% to $2155.669 per ounce.
• A robust dollar makes gold more expensive for buyers using other currencies.
• Investors are awaiting clues on future interest rate cuts from the Fed.
• Lowered expectations for rate cuts this year are putting downward pressure on gold.

Gold Slips After Weekly Downturn

Gold prices on XAUUSD closed at $2,154.25 on Tuesday, 19 March 2024, marking a decline over the last week. Here's a breakdown of the price movement:

• Weekly Low: $2,147.19 (19 March 2024)
• Weekly High: $2,189.08 (11 March 2024)
• Weekly Close: $2,154.25 (19 March 2024)
• Weekly Change: -1.3% (decrease)

The data reveals that gold prices started the week around $2,180 and gradually dipped throughout the week, with a brief recovery attempt on 14 March. This downward trend coincides with the release of stronger-than-expected inflation data, which dampened investor expectations for an early rate cut from the Federal Reserve.

A stronger dollar also contributed to the decline in gold prices, as it made gold more expensive for buyers using other currencies. The upcoming Fed meeting on Wednesday, 20 March, is likely a key factor influencing investor caution and contributing to the recent price movement.

Dollar Strengthens, Dampening Gold Demand

The US dollar rose on anticipation that the Fed might delay plans to cut interest rates. With the Fed widely expected to maintain current rates, the focus has shifted to the central bank's updated interest rate projections.

FOMC Meeting in Focus

Markets are closely watching the Fed's two-day policy meeting, with Jerome Powell's comments and the release of the quarterly dot plot being key events. The dot plot will reveal any changes in projections for rate cuts this year. A decrease in the number of anticipated cuts could further weaken gold prices.

Investor Caution

Higher-than-expected inflation data has led investors to scale back bets on a June rate cut. This shift in sentiment is driving gold prices lower as the appeal of the non-yielding precious metal diminishes with rising interest rates.

Outlook Uncertain

While some analysts predict a rebound in gold prices later this year, the near-term outlook remains uncertain. The Fed's policy decision and its impact on the dollar will be crucial factors to watch in the coming days.