“Gold is likely to remain trapped in a range in the near term due to the conflicting forces buffeting the commodity”
“Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” Michael Hewson, chief market analyst at CMC Markets UK, said in a Reuters interview.
“If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome,” Hewson added.
Meanwhile, the dollar weakened — with the US Dollar Index down 0.3% — bolstering gold’s appeal for investors holding other currencies ahead of the Fed’s policy decision on Wednesday.
“If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” FXTM analyst Lukman Otunuga said.
Market participants are also waiting for the Bank of Japan and the Bank of England’s policy decisions, which are due on Thursday.
Capping bullion’s gains, UK-based drugmaker AstraZeneca resumed its Phase-III trial over the weekend, rekindling hopes for a potential covid-19 vaccine and giving a boost to global markets.
“Gold is likely to remain trapped in a range in the near term due to the conflicting forces buffeting the commodity with major headwinds in the form of rising vaccine hopes and positive economic data from major economies,” Otunuga said.
(With files from Reuters)
