Gold prices struggled for direction in early Asian trading on Wednesday as traders awaited the U.S. Federal Reserve’s widely expected rate hike and a potential end to its monetary tightening cycle.
FUNDAMENTALS
* Spot gold held its ground at $1,964.14 per ounce by 0110 GMT, while U.S. gold futures edged 0.1% higher to $1,965.90.
* Market focus is on a series of central bank meetings this week, starting from the Fed policy decision on Wednesday, followed by the European Central Bank on Thursday and the Bank of Japan a day later.
* Traders expect the U.S. Fed to keep rates in the 5.25%-5.5% range until March 2024, according to the CME FedWatch tool.
* Gold is highly sensitive to rising interest rates as they increase the opportunity cost of holding non-yielding bullion.
* The dollar and U.S. Treasury yields held near their two-week highs from Tuesday, making zero-interest-bearing bullion more expensive for buyers holding other currencies and limiting gains. * While U.S. consumer confidence increased to a two-year high in July, they remained fearful of a recession over the next year following high interest rates.
* The U.S. Commerce Department is also expected to report new home sales likely fell to a seasonally adjusted annual rate of 725,000 units in June, from 763,000 units in the month before.
* Meanwhile in China, net gold imports via Hong Kong fell by about 29% to their lowest in five months in June, reflecting a sluggish economic recovery in the world’s top consumer of the metal.
* Spot silver fell 0.3% to $24.61 per ounce, platinum rose 0.1% to $966.18 and palladium was up 0.3% to $1,287.86.