Gold loses footing as US dollar bumps higher; Fed in focus

Gold prices retreated on Tuesday, hurt by a strengthening U.S. dollar, while investors geared up for the Federal Reserve’s interest rate stance from Chair Jerome Powell’s speech at the conclusion of the central bank‘s policy meeting on Wednesday.

Spot gold fell 0.4% to $2,151.69 per ounce as of 10:15 a.m. EDT (1415 GMT), hovering near its lowest levels in a week hit on Monday. U.S. gold futures eased 0.4% to $2,154.60.

The dollar gained 0.5% and hit a more than two-week high, making gold more expensive for overseas buyers.

Gold is seeing “some exhaustion to the upside as the positions moved swiftly over the past week or two and now it’s taking a bit of a breather as the Fed pricing comes off a bit,” said Ryan McKay, commodity strategist at TD Securities.

“For now we’re not expecting a rally anytime soon. But at the same time, we’re not expecting a big sell off either because the physical markets remain strong and positioning is still fairly bullish.”

Gold prices hit a record peak of $2,194.99 per ounce on March 8, but prices dipped nearly 1% last week after the release of hotter-than-expected February U.S. consumer prices and producer prices reduced hopes of early Fed rate cuts due to the threat of persistent inflation. Higher inflation prompts the Fed to keep interest rates elevated, weighing on non-yielding gold. Although the Fed is widely expected to hold rates steady at the end of its two-day monetary policy meeting on Wednesday, the market is awaiting comments from Powell on updated interest rate projections due on the same day.

Meanwhile, the Bank of Japan (BOJ) ended its eight years of negative interest rates and other remnants of its unorthodox policy.

Spot silver fell 0.9% to $24.78 per ounce, platinum lost 2% to $894.90, palladium slipped 5% to $983.72. (Reporting by Anjana Anil in Bengaluru; Editing by Shinjini Ganguli and Emelia Sithole-Matarise)