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 Kitco.com.