Gold futures slipped early Wednesday as investors awaited an update from the Federal Reserve, which could influence trade for a swatch of assets in the final month of 2021 and into the next year.
Commodity investors are expecting the Fed to cut its monthly bond purchases more aggressively than previously planned, bringing its buying program to a halt by March rather than June. That would allow the Fed, which isn’t expected to raise interest rates until it has halted the purchases, to begin the hiking process earlier than expected.
For gold, higher rates and tighter monetary policy may overshadow concerns about inflation, which have been percolating amid the spread of the new omicron variant of the virus that causes COVID-19.
Buyers of precious metals will be attuned to the so-called dot plot that tracks rate expectations of individual Fed policy makers and is expected to show a consensus for multiple interest rate increases in 2022. In September, the dot plot penciled in only one rate rise next year, though the majority of market participants in surveys expect two hikes. The projections showed a gradual hike in the fed-funds rate to only 1.8% at the end of 2024.
The Fed will release a policy statement at 2 p.m. Eastern, a half-hour after the metals market on Comex closes. Chairman Jerome Powell’s news conference starts at 2:30 p.m.
Against that backdrop, February gold
GCG22,
GC00,
was trading $1.90, or 0.1%, lower at $1,770.50 an ounce, following a 0.9% decline on Tuesday, which marked its lowest finish since Dec. 2, F
SIH22,
actSet data show.
Meanwhile, March silver
SIH22,
declined by 13 cents, or 0.6%, to around $21.80, after gold’s sister metal declined 1.8% a session ago.
A batch of U.S. data, including retail sales, saw metals flit in and out of positive territory briefly. U.S. November retail sales rose 0.3% in November, falling below forecast of 0.8%. Retail sales, excluding autos rose 0.3%, also lower than consensus estimates for 1%, from economists polled by Dow Jones.
Meanwhile, New York’s Empire State factory index rose to 31.9 in December from 30.9 in prior month.
