Gold reaches two-week high before Fed’s meeting

Gold prices rose in European trade on Tuesday on track for the third straight profit in a row, hitting a two-week high and about to trade above $3400 once more as the dollar declines against major rivals.

Later today and tomorrow, an important Federal Reserve’s policy meeting is expected to provide clues on the path ahead for US interest rates.

Prices

Gold prices rose 1.6% today to $3387 an ounce, with April 22 highs at $3334. 

On Monday, gold rose 2.9%, the second profit in a row, and the largest since April 21 on strong haven demand.

The Dollar

The dollar index fell 0.1% on Tuesday on track for the third loss in a row against a basket of major rivals.

It comes amid profit-taking away from three-week highs while traders shun new positions before more developments in US-China trade talks.

The Fed

Today, the Federal Reserve will convene and discuss monetary policies, expected to hold interest rates unchanged.

The Fed’s monetary statement and Chair Powell’s subsequent press conference will likely provide clues on the path ahead for policies.

US President Donald Trump continued to pressure Powell to cut interest rates, however he said won’t fire him before the end of term in May 2026.

According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in May stood at just 8%.

The odds of such a cut in June stood at a healthier 65%.

Goldman Sachs said in a memo that Fed officials would like more evidence from the labor market and other sectors before deciding to cut interest rates, with the bank expecting three 0.25% rate cuts in July, September, and October.

SPDR

Gold holdings at the SPDR Gold Trust fell 4.87 tons yesterday to a total of 939.39 tons, the lowest since April 9.