The prices of gold held steady on Wednesday as investors and the markets wait for the outcome of the U.S. Federal Open Market Committee (FOMC).
The Federal Reserve has implemented a revised approach to monetary policy to address its previous mistakes related to job creation and will provide economic projects through 2023 for the first time. Last month, it also adopted an accommodative monetary policy and promised to keep interest rates low for a longer time. The markets will be looking for clues on how the Feds think its revised approach will work in practice. The FOMC will announce its decision on interest rates at 1800 GMT and it will be followed by a press conference by Chairman Jerome Powell.
The yellow metal was supported by the dollar index which dropped slightly against a basket of rival currencies. A weak greenback makes the bullion less expensive for investors that use other currencies.
Spot gold is currently trading at $1,967.32 per ounce as of 0830 GMT.
GoldSilver Central’s managing director Brian Lam noted that traders and investors want to know how the Feds will support an inflation rate above 2%. Edward Meir of ED&F Man Capital Markets added that people also want to know if the U.S. central will maintain its stance on interest rates and inflation. But he said the Feds is not likely to use a fixed language given the potential upturn of the American economy.
Meanwhile, the U.S. House of Representatives is scheduled to recess before October 2 to allow members to campaign for the November 3 elections. But House Speaker Nancy Pelosi said the Democrats are willing to stay until the new COVID-19 relief bill is finalized. Majority Leader Steny Hoyer added that members of Congress will likely be on indefinite standby for any notice for a vote on the bill.
The coronavirus has infected close to 30 million and killed more than 900,000 people around the world. Underscoring its economic impact, Japan’s exports dropped by 14.8% in August compared to the same month of the previous year.