Gold price back above $1,700 before Fed meetings

Image courtesy of the Federal Reserve Bank of Atlanta.

(This story was been updated June 9)

Gold price kept climbing on Tuesday, surpassing $1,700 an ounce once again, as investors grow hopeful of further monetary policy action from the US Federal Reserve this week.

Spot gold climbed 1.0% to $1,716.73 per ounce by 11:00 a.m. EST, while US gold futures gained 1.2% to $1,719.20 per ounce in New York.

Meanwhile, momentum stalled in risk assets on Tuesday with both European stocks and US futures dropping, while the US dollar strengthened for the first time in nine sessions ahead of the Fed’s two-day gathering.

“The Fed will continue to have uber dovish policies, they will continue to suppress real rates and that’s the main driver for gold purchases over the last few months,” Daniel Ghali, commodity strategist at TD Securities, told Reuters, adding that the macro implications will continue to support the precious metal.

Bullion fell as much as 2.4% to $1,670.14 on Friday — its lowest in more than a month — as an unexpected surge in US employment numbers for the month of May raised hopes for a quick economic recovery and boosted investor appetite for riskier assets.

However, the uptick in gold could also be of technical nature, says Saxo Bank analyst Ole Hansen.

“The break below $1,700 on Friday is once again attracting some demand from investors, who have been waiting on the sidelines for a correction”

Ole Hansen, analyst, Saxo Bank

“The break below $1,700 on Friday is once again attracting some demand from investors, who have been waiting on the sidelines for a correction,” he added.

“You are seeing some short covering and renewed investment buying from people impressed with the resilience of gold,” David Govett, head of precious metals trading at Marex Spectron, told Bloomberg.

Investors now await the decisions to materialize from the US Central Bank’s policy meetings, which will end on Wednesday. Analysts believe this may leave the door open for further stimulus, but interest rates are expected remain above zero.

Elsewhere, spot silver declined 0.3% to $17.73 an ounce, platinum advanced 0.2% to $842.00 and palladium slid 3.7% to $1,946.50.

(With files from Reuters and Bloomberg)

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