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Gold Rebounding from Weekly Lows Ahead of FOMC Meeting

March 19, 2018 at 16:50 by Andrew Moran

Gold futures are rebounding from a two-week low to start the trading week. The yellow metal trading higher ahead of a Federal Reserve policy meeting, where it is expected the US central bank will raise interest rates. Gold prices are in a tight trading range on Monday as the US dollar slipped and US stock indexes tumbled.

April gold futures jumped $6.50, or 0.50%, to $1,318.80 per ounce at 16:33 GMT on Monday. Gold, which has been trading at its lowest level since the beginning of March, recorded a 1% weekly decline last week. This was the biggest weekly loss since the end of February.

Silver, the sister commodity to gold, is trying to muster up a rally to kick off the trading week. May silver futures rose $0.03, or 0.20%, to $16.30 an ounce. The white metal also reported a 2.3% weekly loss last week.

Investors will focus on the results of this week’s two-day Federal Open Market Committee (FOMC) policy meeting. According to the CME Group FedWatch tool, there is a 95% chance of a rate hike. The US central bank is penciling in three rate hikes in 2018, but the market is anticipating at least four. Gold is generally sensitive to a rising-rate environment because traders avoid non-yielding bullion and increase their positions in yield-bearing assets.

But gold bugs will also comb through the details to determine if the Fed is acting to fight inflation. The yellow metal is usually attractive when inflation rises.

The precious metals benefited from a weaker US dollar as the greenback dipped 0.27% to trade under the crucial 90.0 mark. A lower buck is good for dollar-denominated commodities like gold and silver because it makes it cheaper for foreign investors to purchase.

Stemming from President Donald Trump’s Twitter tirade and Facebook shares slumping, the major stock indexes plummeted, sending investors into safe-haven assets.

If you have any questions and comments on the commodities today, use the form below to reply.

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