Gold prices barely changed today as the market waits for the Federal Open Market Committee’s (FOMC) decision on interest rates. Market participants are also monitoring developments on President Joe Biden’s COVID-19 stimulus package. The yellow metal found some support from concerns over the surge in new coronavirus cases as many countries struggle with vaccine shortage.
Spot gold is currently trading at $1,851.57 per ounce as of 0811 GMT.
The FOMC will release its monetary policy decision today at 1900 GMT followed by a press conference by Federal Reserve Chairman Jerome Powell at 1930 GMT.
OANDA senior market analyst Jeffrey Halley commented that if Powell remains ultra-dovish, gold could go up to $1,880 an ounce. But if he shows optimism about the economic recovery, the bullion could drop to near the $1,800 levels.
DailyFX’s strategist Margaret Yang added that the possible delay in U.S. stimulus would benefit gold. But the inflation and economic recovery would be bearish for the precious metal. She expects the bullion to trade between $1,810-$1,870 per ounce in the near term.
Some moderate Republicans in the Senate have expressed objections over the price tag of Biden’s $1.9 trillion stimulus plan. But Senate Majority Leader Chuck Schumer said addressing the pandemic is a top priority for the administration and they will move forward with the bill with or without the support of the Republicans.
Meanwhile, U.S. consumer confidence rose slightly from 87.1 in December to 89.3 in January despite the lingering concerns about the coronavirus pandemic. However, consumers’ assessments of the current labor market and business conditions fell from 87.2 to 84.4, which raised the possibility of a second consecutive month of job losses. The good news is that consumers are more than willing to purchase cars and homes in the first half of 2021.
In physical trading, China’s gold imports via Hong Kong rose for the second consecutive month in December. But total imports for 2020 declined by 85% compared to last year.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, dropped by 0.1% yesterday to 1,172.38 tons.