Gold held near its lowest level in almost two weeks as investors await the U.S. Federal Reserve’s meeting on Wednesday for signals on the central bank’s monetary tightening path this year.
Bullion for immediate delivery traded at $1,231.38 an ounce by 9:12 a.m. in Singapore, after dropping to $1,225.77 on Tuesday, its lowest since March 2, according to Bloomberg generic pricing. The metal remains 16 percent higher this year after investors sought haven assets amid financial market volatility.
Fed officials are expected to reduce the number of rate hikes they see in 2016 and leave the target range for the federal funds rate unchanged after their two-day gathering in Washington. Traders are pricing in a 54 percent chance that the Fed will raise rates in June, up from 6 percent a month ago, according to Fed fund futures data compiled by Bloomberg. Higher rates would damp the appeal of bullion which doesn’t pay interest.
“Gold has pulled back over the last few days, which was long overdue after an otherwise continuous rally since the start of 2016,” Jordan Eliseo, Sydney-based chief economist at trader Australian Bullion Co., said in an e-mail. “All eyes will be on the Fed meeting, and any clues as to potential pace of monetary tightening throughout 2016.”
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