The U.S. dollar regained stability in early Asian trading on Thursday after the Federal Reserve kept interest rates unchanged. At the same time, reports of U.S. air strikes in Iran increased demand for the dollar as a safe-haven currency.
Ahead of the meeting, investors had priced in roughly a 30% probability of a rate hike. The Fed’s decision to hold policy steady therefore eased some pressure on gold and encouraged renewed buying interest.
The gold market is approaching the Federal Reserve’s policy meeting with a high degree of caution. Investors are not only waiting for the interest-rate decision, but also seeking clarity on how the Fed views inflation as the conflict involving Iran continues to drive sharp volatility in energy prices.
The U.S. dollar held near a one-month high on Wednesday as tensions in the Middle East escalated again and markets awaited the Federal Reserve’s key interest-rate decision later in the day. The U.S. Dollar Index traded near 101.38, while USD/JPY stood around 163.74, close to a 40-year high.
Gold prices may remain range-bound for the next three to six months, as the Federal Reserve is unlikely to make any major policy changes before its September meeting.
Gold prices are expected to remain near $4,000 per ounce for the rest of the summer as markets wait for clearer guidance from the Federal Reserve on the direction of monetary policy.
The U.S. dollar held near a one-month high on Tuesday as traders continued to weigh the possibility of a surprise interest-rate increase at the Federal Reserve’s upcoming meeting. The U.S. Dollar Index edged up 0.03% to 101.55. The euro slipped to $1.1366, sterling eased to $1.3284, while the dollar rose to 163.82 yen.
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Gold prices remained above $4,000 per ounce as oil prices declined sharply, U.S. Treasury yields eased and investors awaited the Federal Reserve’s interest-rate decision. Following Monday’s trading session, spot gold gained 0.59%, while silver traded near $58.29 per ounce, up 0.45%.
As of 02:00 GMT, spot gold rose 1.4% to $4,110.56 per ounce, while U.S. gold futures gained 1% to $4,112.10 per ounce. The U.S. Dollar Index fell 0.3%, making dollar-denominated metals more affordable for buyers using other currencies.
The U.S. dollar weakened against major currencies at the start of Asian trading on Monday after the United States temporarily paused its bombing campaign in Iran over the weekend. The move pushed oil prices lower and improved global risk sentiment.