(Bloomberg) — Gold steadied after a weekly drop as traders looked ahead to a US Federal Reserve meeting midweek at which policymakers are expected to reaffirm their stance for higher-for-longer interest rates.
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Bullion traded near $2,335 an ounce after losing more than 2% last week. The US central bank’s preferred measure of Inflation rose at a brisk pace in March, according to data Friday. Swaps traders now see only one Fed reduction this year, well below the roughly six quarter-point cuts seen at the start of the year. Higher rates are typically negative for gold as it doesn’t pay interest.
Foreign-exchange markets were also in focus amid speculation that the Japanese authorities might start buying the yen to support it after the currency hit a more than three-decade low against the dollar. Should they act, it could weaken the greenback, potentially boosting bullion.
Gold has climbed more than 13% this year, hitting a record earlier this month, despite the easing of expectations for Fed cuts, as well as gains in the dollar and US Treasury yields. Its ascent has been linked to central-bank purchases, as well as robust demand from Asian markets including in China.
Spot gold was little changed at $2,334.87 an ounce at 8:33 am in Singapore, after last week’s drop, which was the first weekly retreat since mid-March. The Bloomberg Dollar Spot Index was flat, following two weekly gains. Silver and platinum were steady, while palladium fell.
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