Gold prices dipped in Asian trade on Wednesday, extending recent losses as investors awaited potentially hawkish signals from the Federal Reserve’s policy meeting later in the day.
The drop follows a decline that saw prices fall below $2,300 an ounce, a key support level. This vulnerability stems from diminished safe-haven demand due to easing geopolitical tensions and rising interest rate expectations.
Spot gold (XAU/USD) traded at $2,288.43 per ounce by 07:45 GMT, pressured by the prospect of a hawkish Fed stance. While the central bank is likely to maintain rates at this meeting, Fed Chair Jerome Powell is anticipated to deliver a hawkish outlook due to recent strong inflation data.
Rising inflation has dampened expectations of early rate cuts, with the Fed now only expected to potentially lower rates by September. Higher interest rates reduce the appeal of gold as an investment, putting downward pressure on prices.
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