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September 21 (Reuters) – Gold prices remained unchanged on Tuesday as investors took a risk averse stance amid caution ahead of the Fed’s monetary policy meeting, at which the central bank is expected to provide guidance on when to start tapering its bond purchases.
Gold is seen as a hedge against inflation and currency depreciation, which is likely to result from the widespread stimulus. A restrictive move by the Fed would make gold less attractive, while an eventual rate hike would also increase the opportunity cost of holding the non-interest-bearing asset.
BASICS
* Spot gold XAU = was stable at $ 1,763.60 an ounce at 0123 GMT.
* Prices had rebounded from more than a month’s low in safe haven demand on Monday as China’s debt worries in Evergrande led to a sharp sell-off of stocks around the world. MKTS / GLOB
* US gold futures GCv1 was unchanged at $ 1,764.40.
* Concerns about the consequences of the solvency problems of real estate developer Evergrande have spooked the financial markets and pushed the dollar index up = USD, which hit a nearly month-long high on Monday. A firmer dollar generally makes gold bars more expensive to other currency holders. USD /
* The Fed is likely to provide an outlook on how quickly and how often it believes the economy will need rate hikes over the next three years when it releases new forecasts at its policy meeting on Wednesday.
* The volume of the European Central Bank’s bond purchases will become “less important” as the economic outlook improves and the money printing system becomes a tool to steer interest rate expectations, said ECB board member Isabel Schnabel on Monday.
* Russia’s gold reserves stood at 73.8 million troy ounces in early September, the central bank announced on Monday.
* Silver XAG = rose 0.1% to $ 22.26 an ounce after hitting a more than nine-month low of $ 22.01 in the previous session.
* Palladium XPD = rose 0.6% to $ 1,896.30 after falling to its lowest level since June 2020 on Monday.
* Platinum XPT = rose 0.5% to $ 915.05 after hitting a 10-month low on Monday.
(Reporting by Eileen Soreng in Bengaluru; editing by Sherry Jacob-Phillips)
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