Investing.com – Gold prices are fluctuating today, Tuesday, up and down without a specific destination yet, as it was a short time high, but has now turned lower as markets await a decision.
Most investors are worried a few hours before a meeting that would move the markets strongly if any surprises happen, prompting them to abandon the yellow metal temporarily.
The Fed is now confused about it and the markets are confused with it.. How will gold, the dollar and bonds react to the interest decision now?
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Gold and the dollar now
It fell 0.26% to $1,974 an ounce.
While US gold futures fell 0.28% to 1977 dollars.
It rose 0.13%, to record 103.07 points.
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Back in the top 2000 again
“Gold is trading around the $1980 level, which is not far from yesterday’s range,” said Matt Simpson, senior market analyst at City Index.
“The pause (in rate hikes) could bring gold back above $2,000 initially, but for it to hold on to those gains we would need to see a dovish press conference from the Fed chair… as the Fed is likely to hike by 25 basis points. basis and then Jerome Powell, the US Federal Reserve Chairman, may talk about the next increases will depend on the data.”
Gold is considered a safe haven in times of financial uncertainty, and lower interest rates make non-yielding bullion more attractive by reducing the opportunity cost of holding it.
Analysts at (ANZ) said in a note: “Although banking regulators rushed to boost market confidence, the uncertainty that still hangs over the markets continues to support gold.”
Christiane Baumeister, a professor at the University of Notre Dame, said: “The US Federal Reserve is at a loss, as it has to fight inflation despite the increasing pressures in the banking sector.”
Baumeister urged Fed officials not to “prematurely” stop the monetary tightening campaign, describing it as “an important issue for maintaining the Fed’s credibility as an inflation fighter.”
El-Erian calls on the Fed to raise interest rates
Economist Mohamed El-Erian called on the US Federal Reserve, during a television interview, to raise the main rate by 25 basis points at a meeting this week.
Al-Erian continued: “There is a need for an increase of 25 basis points, because the United States has an inflation problem that needs to be overcome, and at the same time, the US Federal Bank must strengthen its credibility before the citizens that the bank has multiple tools to deal with inflation and other tools to deal with stability.” financial”.
Why are prices falling?
It fell during the past few hours with the approach of the US Federal Reserve meeting related to interest rates, as the meeting starts today, Tuesday, and ends tomorrow, Wednesday.
Markets are now expecting an increase of 25 basis points after they were expecting interest rates to be fixed earlier. According to the market, interest rates are now priced up by 25 points at 73.8%. The tool also indicates a peg rate of 26.2%.
On the other hand, the markets absorbed concerns related to the crisis of the Swiss “Credit Suisse” bank, which limited gold’s gains.
UBS’s announcement of its acquisition of “Credit Suisse” for 3 billion Swiss francs and saving it from collapse contributed to alleviating the volume of turmoil in the markets and the concern of investors regarding the occurrence of a global financial crisis and the transmission of contagion to other banks, which also contributed to the decline in gold.
Technical analysis of gold
