January 27, 2021
Gold dips pressured by stronger dollar; focus on Fed policy
(Reuters) - Gold prices edged lower on Wednesday, weighed by a firmer dollar, as markets awaited the U.S. Federal Reserve's monetary policy decision and developments around a stimulus package in the world's largest economy.
Spot gold dipped 0.2% to $1,846.42 per ounce. U.S. gold futures eased 0.3% to $1,845.30.
"Gold appears to be in a holding pattern as investors are waiting for the Fed," said Jeffrey Halley, a senior market analyst at OANDA.
The U.S. central bank is expected to stand pat on policy when it announces its decision. Market participants will be watching for comments from Fed Chair Jerome Powell for clues on the state of the economy.
"If Powell remains ultra dovish and indicates they have no intention of tapering, that can boost gold up to $1,880, although if he sounds optimistic about the economic recovery, gold can touch near $1,800 levels," Halley said.
An easy monetary policy adds pressure on government bond yields and benefits non-yielding gold.
The dollarrose 0.1%, making gold expensive for holders of other currencies.
Also in focus is U.S. President Joe Biden's $1.9 trillion coronavirus relief plan, which analysts expect to be cut down when it passes through the Senate.
Lending some support to prices were worries over a surge in global coronavirus cases, which surpassed 100 million, as countries struggle with new virus variants and vaccine shortfalls.
"Although the advent of vaccines has placed a ray of hope in eradicating the coronavirus, mass vaccinations is still deeply challenging," Phillip Futures said in note.
"Expectations are not high that there would be any new monetary stimulus measures from the Fed on improving economic conditions yet amid the slow global roll-out of coronavirus vaccines, the Fed may surprise."
Silver fell 0.5% to $25.31 an ounce, platinum shed 0.8% to $1,089.19 and palladium was flat at