Gold prices steady as the dollar rally paused

Gold prices remained steady on Tuesday, as the dollar’s rally was paused. Gold traded around the $1,772 per ounce level on Tuesday, exhibiting low volatility. If gold prices decline, support may be found near $1,739 per ounce, while resistance may be encountered at $1,784 per ounce.

The dollar was steady on Tuesday, with the dollar index maintaining the 105 level and reaching 105.5. US Treasury yields also remained steady, with the US 10-year bond yielding close to 3.5%.

The US central bank’s next monetary policy meeting is scheduled for next week on the 14th and traders are trying to gauge the Fed’s intentions. A Fed blackout period has started on Saturday, which will last until the meeting, during which FOMC members do not deliver speeches that may reveal the central bank’s policy direction. The dollar maintained low volatility this week in the absence of more significant economic indicators and Fed rhetoric. 

Market expectations of future rate hikes were considerably trimmed in the past couple of weeks on cooling US inflation. Market odds are currently between a 50-bps and a 25-bps interest rate increase in December. Gold prices edged higher under diminished expectations of rate hikes. Increases in central banks’ interest rates put pressure on gold prices since assets yielding interest become a more appealing investment compared to gold as interest rates rise. 

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Written by:
Myrsini Giannouli

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