Gold Price Desperately Clings to $1,500 as Divisive Fed Decision Looms

After a sharp rally at the start of the week, the price of gold drifted lower on Tuesday, as risk-off traders shifted their focus to an upcoming meeting of the Federal Reserve.

Gold, Silver Drift Lower

Precious metals were down across the board, giving back some of Monday’s blistering gains. Gold for December settlement, the most actively traded futures contract, reached a session low of $1,500.90 a troy ounce on the Comex division of the New York Mercantile Exchange. It was last down $3.40, or 0.2%, at $1,508.30 a troy ounce.

Gold tests $1,500 a troy ounce in futures trading on Tuesday. | Chart: barchart.com

December silver contracts were down 10 cents, or 0.5%, to $17.98 a troy ounce.

The grey metal has outshined gold for much of 2019, as evidenced by the declining gold-silver ratio. At the time of writing, one ounce of gold bought 84.00 ounces of gold, a slight gain from the previous session. Over the past 60 days, the ratio was as high as 90.33.

The U.S. dollar, which often trades inversely with precious metals, was little changed against a basket of peers Tuesday. At last check, the DXY dollar index was holding steady at 98.60.

Fed Meetings in the Spotlight

The Federal Reserve kicks off a high-stakes policy meeting on Tuesday, with officials set to deliver their verdict the following afternoon.

Bets are suddenly rising that the central bank won’t lower interest rates as previously thought, according to the latest Fed Fund futures prices. As of Tuesday morning, the chance of a rate hike this week was 68.1% based on futures prices. It was higher than 95% earlier this month.

Traders are second-guessing the Federal Reserve’s plans to lower interest rates this week, according to Fed Fund futures prices. | Chart: CME Group

Closely-watched gauges of inflation, both in terms of consumer prices and wages, rose more than expected in August. Usually, that gives central bankers less urgency to lower interest rates.

At the same time, the United States and China are said to be eyeing a temporary trade deal that would delay tariffs and bring stability back to the global macro climate. Those talks are going on behind the scenes ahead of next month’s meetings between the two countries.

The Fed’s rate decision on Wednesday will be accompanied by a revised summary of economic projections covering GDP, unemployment and inflation.

Sam Bourgi edited this article for CCN.com. If you see a breach of our Code of Ethics or Rights and Duties of the Editor or find a factual, spelling, or grammar error, please contact us.

Last modified: January 10, 2020 2:55 PM UTC

Published:
September 17, 2019 12:11 PM UTC
Posted in: Markets
Sam Bourgi @forgeforth87

Financial Editor of CCN.com, Sam Bourgi has spent the past decade focused on economics, markets, and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE, Yahoo Finance, and Forbes. Sam is based in Ontario, Canada and can be contacted at sam.bourgi@ccn.com or at LinkedIn. Visit his Muck Rack profile here.