Gold prices continued to rise for the second consecutive session on Monday, as the dollar retreated after weak US data raised the prospects that the Federal Reserve would strike a dovish tone at its meeting this week.
By 9:38 am GMT, US gold futures went up 0.13% to $1,304.60 per ounce, while spot gold rose 0.18% to $1,304.77 per ounce.
The US central bank is due to start its Federal Open Market Committee (FOMC) meeting on interest rates this Tuesday, ending it with a news conference on Wednesday.
At 9:40 am GMT, the US dollar index, which tracks the greenback against a basket of six major peers, declined 0.13% to 96.4720. The gauge posted its biggest weekly drop since early December last week.
“Dollar positioning into this week’s FOMC meeting will likely be the key determinant for precious price action, while Brexit developments will also be closely watched,” MKS PAMP traders said.
The odds have completely changed, for “a year or six months back, people were talking about policy normalisation, and now to be accommodative,” Yes Securities vice president Hitesh Jain told Thomson Reuters, adding that the flow of US figures could be of support to gold prices.
US manufacturing output declined for the second month in a row last February, while factory activity in New York state came in at a two-year low this month.
With that, the Fed is more likely to affirm its “patient” approach on interest rate hikes this year, while markets in the current moment expect no rate hikes this year, and even wager there will be a rate cut next year.
However, if the central bank signals the possibility of a rate cut this year, the yellow metal prices could soar, Jain said.
The UK government was struggling on Sunday to win the parliament’s approval of prime minister Theresa May’s Brexit deal at the third time of asking.
This article provided by NewsEdge.