Gold awaits Fed

Gold is on track for a third straight month of gains on strong central bank and haven demand, while attention is focused on this week’s Fed rate decision meeting, where policymakers are expected to strike a hawkish tone. Bullion was trading steadily around $2,330 an ounce in early Asian trading and has gained about 5% for the month ahead of Wednesday’s Federal Open Market Committee decision. Officials appear to have turned hawkish after warmer-than-expected inflation data in recent months, and there’s also the possibility that the central bank may be forced to backtrack on Fed Chair Jerome Powell’s hints of faster rate cuts in December. Swap traders are now pricing in a maximum of two rate cuts by the Fed by the end of the year, the fewest since November 2023. Higher rates are generally a negative for gold, as it doesn’t pay interest. Despite the Fed’s delayed timetable for expected cuts, the precious metal has gained more than 13% this year, driven by strong central bank purchases, strong demand from Asian markets, particularly China, and rising geopolitical tensions from Ukraine to the Middle East. Bullion has also received some support from a weaker U.S. dollar in recent days, which fell after the yen rose on Monday amid speculation the Japanese government was intervening to support the beleaguered currency for the first time since 2022. Any further steps could weigh on the dollar. Bullion is more attractive to investors because the metal is priced in foreign exchange. Spot gold was little changed at $2,334.96 an ounce at 9:27 a.m. Singapore time. The Bloomberg Dollar Spot Index rose 0.1% after falling 0.4% on Monday. Palladium fell, while platinum and silver were steady.