Gold eases on profit booking, investor eye Fed policy decision, U.S. stimulus talks
Gold prices eased as investors booked profits after prices hit a record high in the previous session, while the greenback declined ahead of the U.S. Federal Reserve's monetary policy decision.
Spot gold was trading 0.05 percent down at $1,958.85 per ounce by 0831 GMT, having hit an all time high of $1,981.35 on Tuesday. U.S. gold futures rose 0.5 percent to $1,953.85.
The dollar index slumped to its lowest level since June 2018 this week as growing worries about the U.S. economy shifted investors focus on the Congress and the Federal Reserve for a renewed commitment to endless stimulus.
The Federal Reserve publishes its interest rate decision at its policy review later in the day and Chair Jerome Powell holds a press conference half an hour later. The Fed is expected to maintain very loose monetary policies but likely to sound reassuringly accommodative and perhaps open the door to a higher tolerance for inflation.
Investors focus also remains on the next U.S. fiscal package, as an impasse in U.S. stimulus negotiations sent investors into perceived safe-haven assets.
U.S. Senate Republicans on Monday announced a $1 trillion coronavirus aid package hammered out with the White House, however, the proposal stoked immediate opposition from both Democrats and Republicans, who called it too limited compared with their $3 trillion proposal that passed the House of Representatives in May. Republicans’ $1 trillion proposal includes cutting a weekly $600 unemployment benefit, which expires on Friday, to $200 just as cracks emerge in the economic rebound.
Data released yesterday showed, U.S. consumer confidence index declined to a reading of 92.6 this month from 98.3 in June amid a flare-up in COVID-19 infections across the country, which threatened the economy’s recovery from an unprecedented recession caused by the pandemic.
Coronavirus cases continued to rise in the United States and stood at over 16.6 million globally, while an escalation in U.S.-China tensions also dented hopes of quick economic recovery.
The greenback against a basket of currencies traded 0.2 percent down at 93.51, having touched a low of 93.48 on Monday, its lowest since June 2018. The U.S. Treasury yields edged higher, with the benchmark 10-year note yield trading at 0.589 percent.