Gold prices sink as U.S. dollar strengthens ahead of Fed policy update

Gold prices sink as U.S. dollar strengthens ahead of Fed policy update

Gold futures were trading lower Wednesday, on track for a fifth consecutive decline, as investors awaited a Federal Reserve meeting that could offer clues on how central bank officials view the economic outlook.

The policy update, which occurs after gold settles at 1:30 p.m. Eastern, could be influenced by the central bank’s take on the health of the U.S. amid the coronavirus pandemic.

Gold’s trade on Wednesday was being weighed by a rebound in the U.S. dollar, which was up 0.4%, as gauged by the ICE U.S. Dollar Index
A stronger dollar can undercut appetite for gold among those investors using other currencies.

February gold 


was off $9.10, or 0.5%, at $1,841.70 an ounce, after falling 0.2% on Tuesday. A decline Wednesday would match the longest streak of lower settlements for a most-active contract since a five-session slide ended on April 30, FactSet data show.

Silver for March delivery 


 declined 40 cents, or 1.7%, to reach $25.11 an ounce, following a 0.2% gain in the prior session.

“There will be a technical breakdown if gold and silver continue to fall in the US session and before Federal Reserve press conference,” wrote Chintan Karnani, chief market analyst at Insignia Consultants, in a Wednesday note.

The Fed will conclude its first policy meeting of 2021 on Wednesday afternoon, releasing a policy statement, followed by Chairman Jerome Powell’s news conference at 2:30 p.m.

The Fed isn’t expected to make any policy moves and Powell is likely to reiterate the central bank’s commitment to maintaining loose monetary policy until after inflation has exceeded its 2% target.

However, commodities dealers have been closely watching central banks as a potential source of bullish momentum for gold prices.

“Markets could become more active in the afternoon trade, following the FOMC statement’s release … Fed Chairman Powell does have a history of making unexpected remarks during his press conference that have rattled markets,” wrote Jim Wyckoff, senior analyst at

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