Gold prices dip as dollar firms ahead of U.S. Fed meet

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Gold prices slipped on Monday, pressured

by a firmer dollar as investors braced for aggressive rate hikes

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by major central banks this week, especially from the U.S.

Federal Reserve, to tame high inflation.

Spot gold was down 0.6% at $1,665.08 per ounce, as of

0623 GMT. U.S. gold futures fell 0.6% at $1,673.30.

Trading is expected to be light with bullion market in

London, the world’s biggest trade center for physical gold,

being closed for Queen Elizabeth’s funeral.

The dollar index gained 0.2%, making bullion more

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expensive for overseas buyers.

“We’ll see some choppy, sideways trade leading up to the

FOMC meeting, with $1,680 likely being a pivotal level for

traders over the near-term,” said Matt Simpson, a senior market

analyst at City Index.

“A hawkish hike would be another nail in the gold coffin,

and will likely send prices down to the $1600–$1650 range.”

The U.S. Fed’s Federal Open Market Committee is expected to

begin its two-day meeting on interest rates on Sept. 20 and

announce its decision the following day. Markets are fully

pricing in a 75-basis-point rate hike by the U.S. central bank.

Most of the banks meeting this week – from Switzerland to

South Africa – are expected to hike, with markets split on

whether the Bank of England will go by 50 or 75 basis points.

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U.S. consumers’ near-term inflation expectations fell to a

one-year low in September, easing fears that the Fed could raise

interest rates by a full percentage.

Gold is known as a safe investment amid inflation woes, but

high interest rates increase the opportunity cost of holding

non-yielding bullion.

“Rising geopolitical and economic risks are doing little to

entice (safe) haven buying, with the U.S. dollar still the asset

of choice,” said ANZ in a note.

Spot silver lost 1.2% to $19.32 per ounce, platinum

fell 0.8% to $900.17 and palladium was down 1.7%

at $2,097.45.

(Reporting by Brijesh Patel and Ashitha Shivaprasad in

Bengaluru; Editing by Sherry Jacob-Phillips)