Gold futures are edging higher on Monday, mirroring the weakness in the U.S. Dollar Index. Volume is light as many of the major players take to the sidelines ahead of the start of the U.S. Federal Reserve’s two-day monetary policy meeting on Tuesday. In addition to the Fed this week, gold investors will also have the opportunity to react to the latest monetary policy decisions from the Bank of Japan and the Bank of England.
At 09:38 GMT, December Comex gold is trading $1950.40, up $2.50 or +0.13%.
Early Look at Fed Decisions
The Fed holds its last meeting prior to the presidential election in the week ahead, and while it’s likely to sound dovish, it may not give markets the details on policy that investors want to hear.
The market could remain caught in a volatile trading pattern, as investors focus on the Fed, the economy and the election.
The markets are looking to the Federal Reserve to be a soothing force when it meets in the week ahead, but stocks could remain choppy if the central bank disappoints and as investors focus on the election and the economic recovery.
The Fed’s two-day meeting is expected to end Wednesday with minor tweaks to its statement and some clarity on how it plans to use forward guidance. The Fed also updates its economic and interest rate outlook, including forecasts for 2023 for the first time.
Central Banks Key Focus This Week
Besides the Fed, gold traders are also looking forward to hearing from the Bank of Japan and the Bank of England on Thursday. Major central banks have rolled out unprecedented stimulus measures and kept interest rates low, driving gold to new highs because of its role as a hedge against inflation and currency debasement.
We saw last week that central banks can move gold prices even when they make no changes to policy because it’s all about trader expectations ahead of the announcements. Last Thursday, the European Central Bank (ECB) moved gold prices when it held policy steady.
The early price action in thegold marketsuggests investors aren’t expecting much from the Fed in September. If there is a concern, it’s that the Fed is not going to give us explicit readings on their plans for monetary policy.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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