Gold slightly revives as attention diverts to the Fed’s decision

Gold became more affordable for holders of other currencies as the dollar depreciated 0.2% following its peak of almost six months, and the yield on the benchmark 10-year U.S. bond also decreased.

Money

By Sneha Sengupta On May 1, 2024

A decline in the value of the dollar and U.S. Treasury yields encouraged some bargain hunters, but gold prices rose on Wednesday as caution set in ahead of the U.S. Federal Reserve policy decision later in the day.

As of 10:06 a.m. ET (1406 GMT), spot gold was up 1% at $2,307.88 per ounce, having earlier in the session dropped to its lowest level since April 5. U.S. gold futures increased to $2,318.50, up 0.7%.

“There is a little more uncertainty about the global economy and along with geopolitical tensions and the uncertainty regarding the political elections, there’s just a lot that are working in favor of gold,” stated Chris Gaffney, president of world markets at EverBank

On April 12, demand from Chinese retail investors and robust central bank buying drove gold to a new high of $2,431.29.

Prices have, however, dropped more than 5% since then as expectations for an early reduction in US interest rates this year have faded and Middle East tensions have decreased.

“Higher rates for longer, which would typically be negative for gold, but investors are able to push that to the back burner and are looking at things that are actually more supportive of gold right now,” Gaffney added.

At 1800 GMT, the U.S. central bank is expected to announce its policy, and Chair Jerome Powell will thereafter make a statement. It is anticipated that the Fed would maintain its benchmark interest rate between 5.25% and 5.5%. Spot platinum increased 2.6% to $957.70 while silver increased 1% to $26.54 per ounce. Palladium at $947.75 remained stable.