PRECIOUS-Gold holds steady despite firm dollar as Fed comes into focus

Reuters · 03/16/2021 10:17
PRECIOUS-Gold holds steady despite firm dollar as Fed comes into focus

Fed's two-day meeting starts later on Tuesday

Investors eye U.S. retail sales data at 1230 GMT

Adds details, quotes, updates prices

By Brijesh Patel

March 16 (Reuters) - Gold prices held steady on Tuesday despite a stronger dollar, as investors expected the U.S. Federal Reserve to keep the policy accommodative and address concerns over rising inflation and a recent spike in U.S. Treasury yields.

Spot gold XAU= was little changed at $1,732.02 per ounce by 0952 GMT. U.S. gold futures GCv1 were up 0.1% at $1,730.50.

"Gold is not coming under pressure despite stronger dollar and higher U.S. yields and equity markets. Gold seems to have found some relative strength despite the strong headwinds," Commerzbank analyst Eugen Weinberg said.

"The fact that the US Fed policy is likely to stay dovish, which is likely to be confirmed tomorrow is offering support to gold. On the other hand, most of the negative news seems to have been priced in already."

Some investors view gold as a hedge against higher inflation that could follow stimulus measures, but higher Treasury yields dull some of the appeal of the non-yielding commodity. US/ nL1N2L811C

Meanwhile, the dollar index .DXY rose for a third straight session, making gold more expensive for other currency holders. USD/

The U.S. central bank's Federal Open Market Committee ends its two-day meeting on Wednesday. The Fed has kept interest rates pinned near zero for the past year, and has promised to keep them there until the economy reaches full employment.nL1N2L82OT nL1N2L82MC

"The Fed may address rising inflation concerns and even consider to push forward asset purchasing to compensate for the rising yields and that would be very positive for gold prices," said DailyFX strategist Margaret Yang.

Also on the radar, the U.S. Commerce Department's February retail sales data is due at 1230 GMT.

"A clear move above $1,740 would provide the first positive signal, while a new fall below $1,700 will put gold back in the danger zone," ActivTrades chief analyst Carlo Alberto De Casa said in a note.

Elsewhere, silver XAG= fell 0.8% to $26.04, platinum XPT= slipped 0.8% to $1,202.92 and palladium XPD= was steady at $2,386.92.


(Reporting by Brijesh Patel in Bengaluru, editing by Ed Osmond)

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