Precious metals recover lost ground as traders count down to Fed meeting
Precious metals, particularly gold and silver, were slightly up on Monday ahead of the US Federal Reserve monetary policy meeting this week, a decline in the value of the US dollar and a rise in US government bond yields.
Gold for immediate delivery surged 0.4% to $1,315.05 an ounce in early afternoon trading in London, after closing Friday at $1,310.35 its lowest price since Aug. 31. Silver rose 1.6% to $19.091 an ounce, while Platinum climbed 1.1% and palladium advanced 0.3%.
The moderate gains come as Wednesday’s crucial Fed meeting approaches. Most investors expect the central bank to put off raising rates, which would keep gold as an attractive asset to buy.
But higher rates would increase the opportunity cost of keeping gold, which pays its holders nothing and struggles to compete with yield-bearing assets when borrowing costs rise.
Investors are also expecting the results of the Bank of Japan meeting, scheduled for this week.
Gold touched a two-year high in July around $1,380 an ounce and year to date the metal is up 25% or nearly $300 an ounce, one of its best annual performances since 1980.