Gold prices dip in ASia with Fed ahead, political risk eyed
Gold prices eased in Asia on Wednesday with a widely expected Fed rate hike later in the day the key market factor, though growing political risk has supported prices.
Gold for April delivery on the Comex division of the New York Mercantile Exchange eased 0.30% to $1,199.00 a troy ounce.
Overnight, gold prices traded slightly above break even on Tuesday, as political uncertainty in Europe continued to support prices ahead of the Federal Open Market Committee interest rate decision on Wednesday.
Political jitters across Europe continued to be thematic throughout the session, after the UK Parliament passed the Brexit bill, paving the way for the government to trigger Article 50, which formally starts the Brexit process.
The UK Parliament’s decision came a day after Scottish First Minister Nicola Sturgeon announced in a speech Monday, the Scottish Government will move to hold a second referendum on independence from the United Kingdom.
Meanwhile, the upcoming Dutch parliamentary election on Wednesday also provided a reason for investors to take risk off table, after a poll (Peil.nl) released earlier on Tuesday showed that 65% of the voters are not yet sure of their vote and could change their mind for another party by Wednesday.
Despite the fresh bout of political uncertainty, investors remained focused on the Federal Open Market Committee (FOMC) meeting, which commenced on Tuesday, and widely expect the FOMC to hike interest rates on Wednesday.
According to Investing.com’s Fed rate monitor tool, 95% of traders expect a rate hike on Wednesday.
Gold is sensitive to moves in U.S. interest rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.