Gold stuck in narrow range as investors focus on US Fed's meeting this week

By Eileen Soreng

(Reuters) - Gold traded in a tight range on Tuesday, pinned below the $1,800 psychological level, as investors focused on this week's Federal Reserve meeting for clues about when the central bank might rein in its easy monetary policies.

Spot gold was flat at $1,797.71 per ounce by 0324 GMT. U.S. gold futures fell 0.1% to $1,797.70 per ounce.

The dollar index held steady just below recent peaks. The greenback has been rising broadly for more than a month as markets are wary of the Fed starting to taper its monetary support.

"Investors are waiting for the FOMC (Federal Open Market Committee) meeting for more clues on the direction of the U.S. dollar and its ramifications to the gold prices," said Margaret Yang, a strategist at DailyFX.

The two-day meeting will start on Tuesday and a policy statement will be issued at 1800 GMT on Wednesday, followed by a news conference by Fed Chairman Jerome Powell.

Investors will be looking at how the Fed responds to fast-rising prices while facing increasing threat posed by the more contagious Delta variant of the coronavirus.

"The market has perhaps underestimated the adverse impact that the Delta variant could bring to economic rebound and give central banks reason to delay tapering," Yang said.

In the medium term, gold prices will have more room to go up if central banks continue to implement their accommodative monetary policies, she added.

Large stimulus measures tend to support gold, which is often considered a hedge against inflation and currency debasement.

Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.2% to 1,025.64 tonnes on Monday, the lowest since May 13. The ETF has seen outflows of about 20 tonnes so far in July.

Elsewhere, silver fell 0.1% to $25.14 per ounce, palladium was down 0.9% to $2,632.75, and platinum eased 0.4% to $1,059.61.

 

(Reporting by Eileen Soreng in Bengaluru, Editing by Sherry Jacob-Phillips and Subhranshu Sahu)