Gold Hits Three-Week High as Investors Wait for Fed
Gold prices notched a three-week high Tuesday, as investors awaited the result of the Federal Reserve’s two-day monetary policy meeting.
Investors will be keeping a close eye on the Fed’s monetary policy statement on Wednesday for clues on how the central bank views the U.S. economic recovery, after a spate of unfavorable data in recent weeks. Most market participants expect the Fed to keep rates low into the summer, as it waits for the economy to bounce back from its recent soft patch. Continued low rates are good news for gold, which struggles to compete with yield-bearing investments when borrowing costs rise.
Weaker-than-expected consumer confidence data reported on Tuesday morning bolstered those expectations and helped gold extend its gains. Data from a private research group, showed consumers in the U.S. are feeling less confident about the economy this month due to a slowdown in job creation and worries about the near-term outlook.
The last several days have given investors fresh reasons to buy gold. Prices for the precious metal notched their biggest gain since January on Monday, bouncing from a one-month low on worries over Greece’s ability to pay its debts and the country’s future in the eurozone. Gold consumption in China also showed signs of recovering in the first three months of the year after plunging in 2014, as low prices attract interest from Asian buyers.
China and India together account for some 50% of the world’s gold demand.