Gold clings to $2,150 ahead of crucial Fed meeting

Gold rebounds above $2,150 but is facing pressure from a strong dollar and upcoming Fed meeting.

Gold clings to $2,150 ahead of crucial Fed meeting
Gold Steady Ahead Of Fed Meeting

Gold (XAU/USD) prices have inched back above $2,150 after dipping below the key level yesterday, as investors remain cautious ahead of the Federal Reserve's interest rate decision.

The precious metal is finding some support from ongoing uncertainty surrounding the Fed's monetary policy stance. Spot gold was trading at $2,154.79 per ounce by 8:00 GMT on Tuesday.

However, a strong dollar continues to weigh on gold prices. Expectations of the Fed maintaining rates, coupled with dovish signals from the Bank of Japan, have boosted demand for the greenback.

The dollar index climbed to 103.86 on Tuesday following the Bank of Japan's decision to raise rates from -0.1% to 0.1%, marking the first tightening since 2007. The dollar has also seen strong gains over the past two trading sessions.

While the Fed is widely anticipated to keep rates unchanged at the conclusion of its two-day meeting on Wednesday, any hawkish signals, particularly a shift in interest rate cut forecasts, could put downward pressure on gold. Recent hotter-than-expected inflation data has raised concerns that the Fed might take a more hawkish stance.

Rising interest rates tend to dampen demand for gold, as they increase the opportunity cost of holding non-yielding assets like bullion.

Subscribe to Investomania for more gold news and updates.