Gold Prices Slip as Investors Brace for Central Bank Policy Decisions

Gold prices slipped at the beginning of this week as the US dollar strengthened and investors prepared for a series of policy decisions from major global central banks, including the Federal Reserve later this week.

On Monday (18/3) at 10:30 WIB, spot gold prices fell by 0.4% to US$ 2,147.89 per ounce. Similarly, US gold futures dropped by 0.5% to US$ 2,151.3 per ounce.

"A fairly hawkish tone from the Fed has emerged... indicating a fairly strong consensus that there may only be one or two rate cuts this year," said Kyle Rodda, a financial market analyst at

The Fed is widely expected to maintain interest rates at 5.25%-5.5% at the conclusion of its two-day meeting on Wednesday.

However, there is a possibility that the Fed will signal a higher policy outlook for a longer period considering the stubbornly firm inflation at both consumer and producer levels.

Traders are currently estimating a 56% chance of a rate cut in June. Higher interest rates diminish the appeal of holding non-yielding assets like gold.

Last week, data showed a strong increase in US consumer prices in February and producer prices rose more than expected amid spikes in prices of goods such as gasoline and food.

"If we get a less hawkish outcome from the Fed, there's a reason why we'd see the dollar weaken, lower yields, and that can only trigger a rally and provide a fundamental boost, and then we see the US$ 2,200 level," Rodda said.

The US dollar remained steady near a two-week high against its peers, making gold more expensive for holders of other currencies.

On the other hand, the Bank of Japan is expected to step away from its ultra-dovish monetary policy at its two-day meeting ending on Tuesday. The Bank of England will hold its meeting on Thursday and is expected to keep its interest rates unchanged.

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