Investing.com – The US dollar paused the gains that overwhelmed the markets in the past few days to give gold some breathing space after a violent wave of losses.
This comes hours before Tuesday and tomorrow Wednesday, along with renewed fears of a more-than-expected tightening from the Fed.
Markets anticipate the central bank’s tendency to increase prices by at least 75 basis points, with the potential for a larger increase of 100 basis points, which will put pressure on the equity and riskier asset markets.
After very limited rises that lasted only a short period during trading today, Tuesday, gold returned to the fall again, to give up nearly 8 dollars from the price of an ounce in spot prices.
The US dollar fell by about 8 dollars to levels of 1667 dollars an ounce, down by 0.45% during these moments of trading on Tuesday.
It fell slightly under a dollar and an ounce is trading at levels below $1,680 during these moments.
At the end of trading yesterday, the price of gold futures contracts for December delivery decreased by 0.3%, to record $ 1678.30 an ounce, to be near the lowest level since April 2020.
On the other hand, the main dollar index trimmed most of its morning losses, which amounted to about 0.2%, when it fell near levels of 109.36 points against a basket of major currencies.
While the dollar index is trading during these moments of trading today, Tuesday, near the levels of 109.7 points against a basket of major currencies, with a decline that does not exceed 0.04%.
The 10-year US Treasury yield rose above 3.5% for the first time since 2011, as investors prepared for interest rate hikes by major central banks this week, especially from the Federal Reserve, to tame high inflation.
The yield on US 10-year Treasury bonds increased today, Tuesday, in the range of 0.03 points, to reach 3.52%, as it is trading at its highest level in more than 11 years.
While the two-year return exceeded its highest level since 2007, reaching levels near 4%, where it is trading near levels of 3.979%.
“Escalating geopolitical and economic risks are doing little to tempt gold as a safe haven, with the US dollar remaining the asset of choice,” ANZ analysts said.
“We will see some choppy and sideways trade ahead of the FOMC meeting, and the $1,680 level is likely to be pivotal for traders in the near term,” said Matt Simpson, senior market analyst at City Inc.
Matt Simpson added: “A hawkish rally will be another nail in the coffin of gold, and is likely to drive prices down to the $1,600-1650 range.”
The Federal Reserve’s Federal Open Market Committee is expected to start its two-day meeting on interest rates on September 20 and announce its decision the following day.
Markets are fully pricing in a 75 basis point rate hike by the US Federal Reserve, which is trying to combat inflation.
US consumers’ near-term inflation expectations fell to their lowest level in one year in September; This eased fears that the Federal Reserve may raise interest rates by a full rate.