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