Eco
Gold prices stabilized on Tuesday after touching their lowest level in over a month during the previous session. This stability comes as investors keenly await the Federal Reserve's (US Central Bank) decision on monetary policy, seeking indications about its future direction. The price of gold in spot transactions remained unchanged, settling at $4300.96 per ounce, after hitting its lowest level yesterday since August 7th. Meanwhile, US gold futures fell by 0.3 percent to $4341.10. The Federal Reserve is set to announce its decision on monetary policy tomorrow, Wednesday, at 18:00 GMT, following the conclusion of a two-day meeting. Markets are strongly betting that policymakers will raise the benchmark interest rate by a quarter of a percentage point, bringing it to a range of 3.75 percent to 4.00 percent. In this context, Tony Sycamore, a market analyst at IG, explained that the way Federal Reserve Chairman, Kevin Warsh, frames this rate hike will be more significant for gold than the hike itself. He elaborated that if Warsh portrays the increase as the beginning of a tightening cycle with decisions made on a meeting-by-meeting basis, it would strike a blow to gold and risky assets generally. However, if he indicates a preference for a more moderate pace, it would be supportive of risk sentiment and the precious metal. Despite gold being viewed as a hedge against inflation and geopolitical risks, it often loses its appeal when interest rates rise. This phenomenon is due to the fact that these increases raise the opportunity cost of holding the non-yielding metal.
