Gold prices held steady on Monday, near a seven-month peak scaled in previous session, on hopes the US Federal Reserve will keep interest rates unchanged during its two-day policy meeting later in the week.
Spot gold was firm at $1,302.58 per ounce, while US gold futures climbed 0.3 percent to $1,301.90 per ounce.
The Federal Open Market Committee meets between 29 January and 30 January, and chairman Jerome Powell is widely expected to acknowledge growing risks to the US economy as global momentum weakens.
“Gold is having a very positive macro stance in the sense the US Fed is going to be more accommodative along with the European Central Bank (ECB), which is seeing downside risks to the economy,” said Edward Moya, market analyst at OANDA.
The Fed raised interest rates four times last year and has signalled it will probably lift borrowing costs twice in 2019, though some central bank officials have said they will be patient in raising rates.
ECB president Mario Draghi warned last week that a dip in the euro zone’s economy could be more pronounced, comments seen as signalling a delay in the bank’s first interest rate hike.
Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.
Meanwhile, Asian stocks advanced on Monday as Wall Street rallied after a deal was announced to reopen the US government following a prolonged shutdown that had shaken investor sentiment.
The shutdown had added to the worries of investors who were already concerned over slowing global growth, signs of stress in corporate earnings and a still unresolved Sino-US trade war.
“While the shutdown concerns are alleviated now, the long-term play is really uncertain,” Moya said.
Spot gold rose 1.8 percent on Friday, notching up its best one-day percentage gain since 11 October, hitting its highest since 14 June, 2018. The metal also broke above the psychological level of $1,300 after failing multiple times due to strong technical resistance.
“With a breakout of sorts now evident on the gold charts, there could be further upside room for the precious metal,” INTL FCStone analyst Edward Meir said in a note.
“The Fed meeting this week could be instrumental in triggering more dollar selling as well, as could positive Brexit developments, which is why we would stay long gold going into the week.”
Among other metals, palladium was steady at $1,361.50. Its Price had hit a record high of $1,434.50 on 14 January.
Silver was firm at $15.76 per ounce, while platinum rose 0.3 percent to $816.
To keep watching India’s No. 1 English Business News Channel – CNBC-TV18, call your Cable or DTH Operator and ask for the Colors Family Pack (inclusive of 24 channels), available for Rs. 35/- per month, or subscribe to the channel for Rs. 4/- per day.
To keep watching the Leader in Global Market & Business News – CNBC-TV18 Prime HD, call your Cable or DTH Operator and ask for the Colors Family HD Pack (inclusive of 25 channels), available for Rs. 50/- per month, or subscribe to the channel for Rs. 1/- per day.
Firstpost is now on WhatsApp. For the latest analysis, commentary and news updates, sign up for our WhatsApp services. Just go to Firstpost.com/Whatsapp and hit the Subscribe button.
Updated Date: Jan 28, 2019 11:35:16 IST