Meanwhile, benchmark US Treasury yields scaled a new 13-month high, sapping non-yielding gold’s appeal. The dollar index also advanced and raised the cost of holding the metal for other currency holders.
Investors are now awaiting the policy statement from the Fed scheduled for later today, which would effect more movements in the market.
“Powell will (likely) state that inflationary pressures will probably be temporary and not that big … that will probably push up 10-year yields, the dollar and hurt gold a bit,” David Madden, analyst at CMC Markets UK told Reuters, adding that bullion could fall towards $1,600 in the coming months.
However, Madden followed up by saying the Fed would likely also signal an intention to maintain low interest rates, cushioning gold’s losses and providing some support.
“From a technical point of view, a clear climb above $1,740 would open space for further gains, while a decline below the $1,700 mark will show weakness,” ActivTrades chief analyst Carlo Alberto De Casa said.
(With files from Reuters)
