June 15, 2021
Gold prices ease as U.S. dollar firms ahead of Fed meeting
(Reuters) - Gold prices on Tuesday fell for a third straight day, as an uptick in the dollar dented the safe-haven metal’s appeal, while investors awaited the U.S. Federal Reserve meeting outcome for clues on the trajectory of its unprecedented monetary stimulus.
Spot gold was down 0.1% at $1,864.82 per ounce, after falling to its lowest since May 17 at $1,843.99 on Monday.
U.S. gold futures eased 0.1% to $1,866.70.
“The strengthening U.S. dollar is weighing on gold prices. Technically, gold has broken down a key support level and it seems to be entering into a bearish trend,” said Margaret Yang, a strategist at DailyFX.
“There seems to be surging demand for the Fed’s reverse repo facility, which suggests that liquid conditions in the market are ample. This means that the market is probably prepared to withstand a gradual scaling bag of Fed’s asset purchasing.”
The dollar held firm near a one-month high versus its rivals, making gold more expensive for other currency holders.
Investors await the Wednesday outcome of the Fed’s two-day policy meeting. Nearly 60% of economists in a Reuters poll said a much-anticipated taper announcement will come in the next quarter.
Also on the radar, U.S. monthly retail sales data due later in the day.
Recent data showing a spike in U.S. consumer prices has benefited gold as it is seen as a hedge against inflation.
“Expectations are high that the Fed would not change the script of the minutes, but recent labour market improvements and higher inflation numbers do raise the risk that the Fed will be less dovish,” Avtar Sandu, senior commodities manager at Phillip Futures, said in a note.
Spot gold may retest a support at $1,842 per ounce, a break below could cause a fall to $1,825, according to Reuters technical analyst Wang Tao.
Silver dropped 0.6% to $27.66 per ounce, palladium was steady at $2,748.35, while platinum slipped 0.4% to $1,159.94.