Gold prices rallied higher during Wednesday trading session ahead of the U.S. Federal Reserve’s policy decision, which is due for announcement later this evening. Gold futures edged up 0.49% to trade at $1975.30 at about 13.00 GMT.
Traders are expected to focus their attentions on the U.S Federal Reserve bank, knowing if it will continue to maintain an accommodative approach towards inflation and keep interest rates lower for a longer period.
In addition, the drop seen in the U.S dollar Index on Wednesday helped stabilize the yellow metal at most parts of London’s trading session early on Wednesday.
What you should know; The precious metal is regarded as a safe-haven asset and popular during times of geo-economic uncertainty. It has gained significantly during the onset of the COVID-19 onslaught with prices reaching as high as $2,072 in August.
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Stephen Innes, Chief Global Market Strategist at AxiCorp in an email to Nairametrics spoke on the prevailing macros, gold traders and global investors are focused on.
“The Gold rally stalled as trader look to the FOMC for the next course of direction and projections, which extend to 2022. At the moment, records show only 2 of the 17 Fed members expect rates to move up in 2022.
“The main question for gold investors is that with improving data and a vaccine on the horizon, how many Fed members will start to whistle a less dovish tune and bring forward rate hike expectations.”
He explained that this could be where the policy debate most likely centers. But for gold to go significantly higher, he added that the Fed must make a credible promise to act full dove and aggressively drive inflation expectations higher.