Gold dips pre-fed, awaits Powell’s take on economy

LONDON: As the dollar finally ratcheted higher amid a meltdown in stocks, safe-haven gold joined risk assets, including bitcoin, on the way down Wednesday as dabblers in the yellow metal awaited the Federal Reserve’s latest take on the economy.
Pursuant to its first monthly policy meeting for 2021, the Fed said it has kept U.S. interest rates at near-zero – as they have been for nearly a year since the Covid-19 outbreak – while pledging to buy more bonds to support the economy. Chairman Jay Powell is expected to give his own insights on the direction of the economy and the virus’ track in a news conference scheduled at 2:30 PM ET (19:30 GMT).
Gold for February delivery on New York’s Comex settled at $1,844.90 – down $6, or 0.3%, on the day, extending the drop of more than $5 over the past two days.
The benchmark U.S. gold futures contract has been in slow-mo mode since the week began, compared with the volatility of the past fortnight. February gold rose more than $26, or 1.4%, last week after losing almost 3.5% in the previous two combined.
The Dollar Index, which pits the greenback against a basket of six currencies, was up 0.3% on Wednesday, while the benchmark U.S. 10-Year Treasury note slid 2.5%. The S&P, barometer for the top 500 U.S. stocks, tumbled almost 2% while bitcoin lost another 5%, briefly shattering its $30,000 support.
Gold could likely fall further if the dollar advanced, cautioned analysts.
“The dollar index is closing in on 91 once again and a breakout could be a very bullish near-term signal for the greenback,” said Craig Erlam at online broker OANDA.
“This has been a major level of resistance for the dollar on a few occasions over the last month and a break could be the catalyst for quite a bullish move, piling pressure on gold and those support levels. Gold will likely see a strong test of support, built up in the $1,800-1,830 region.”