Gold’s attention turned to the Fed meeting
Gold continued its sharp decline in the previous session, as the latest US economic data further diminished hopes that the Fed would quickly return to monetary expansion.
Spot gold traded below $2,300 per ounce in Asian markets after closing 2.1 percent lower on Tuesday as investors focused on the latest data showing an acceleration in the US labor costs indicator in the first quarter. The latest report reinforced the pessimism that the Federal Open Market Committee will use a more hawkish tone in its interest rate decision statement on Wednesday.
Swap markets show that only one interest rate cut is priced for 2024. This figure is lower than the three rate cuts the Fed said it was targeting in December. Higher interest rates have traditionally had a negative impact on the non-yielding precious metal.
Meanwhile, the US dollar index rose the most in more than two weeks on Tuesday, making spot gold more expensive for buyers.
The precious metal had risen more than 10 percent this year due to strong demand from Asian markets, especially China, and conflicts in Ukraine and the Middle East. The World Gold Council also said on Tuesday that demand from central banks had its strongest start on record in the first quarter for any year.
Spot gold was little changed at $2,287.82 per ounce at 11:19 a.m. in Singapore, which is a public holiday along with many other countries in Asia.