Gold prices were little changed on Tuesday, as cautious investors focused on key central bank meetings this week, with the U.S. Federal Reserve likely to accelerate its plans for the roll-back of its pandemic-era economic support measures.
· Spot gold was last down 0.1% to $1,785.65 per ounce by 0030 GMT. U.S. gold futures also fell 0.1% to $1,786.00.
· The U.S. central bank is set to begin its two-day monetary policy meeting on Tuesday, with investors expecting the Fed to announce wrapping up its bond purchases sooner than expected, as they look for clues on timing of interest rate hikes next year.
· Apart from the Fed, the European Central Bank, the Bank of England and the Bank of Japan are also scheduled for meetings this week.
· The ECB, meeting on Thursday, is likely to confirm that its 1.85 trillion euro ($2.09 trillion) pandemic emergency stimulus scheme will end next March.
· Dollar near one-week high amid hawkish Fed hopes, omicron fears
The dollar traded near a one-week high versus a basket of major rivals on Tuesday, supported by expectations of a hawkish Federal Reserve meeting this week and haven demand amid continued uncertainty about the omicron coronavirus variant.
The dollar index, which measure the currency against six peers, was little changed at 96.416, after touching 96.450 on Monday for the first time since Dec. 7.
The Fed’s two-day meeting that begins later Tuesday headlines a string of central banks announcing policy decisions this week, including the European Central Bank and Bank of England on Thursday and the Bank of Japan on Friday.
The U.S. central bank is expected to announce it will wrap up its bond buying stimulus sooner than previously communicated, potentially setting up earlier interest rate increases next year.
Money markets currently price good odds of a rate hike by June, with another as early as November.
A Reuters poll of ECB-watchers found the ECB would halve the amount of assets it buys each month from April.
The euro was about flat at $1.12835 after touching a one-week low of $1.12605 overnight.
Sterling was little changed at $1.3210, meandering for the past week near the one-year low of $1.31615 reached last week.
· Fed taper will have little impact on Asia markets, UOB strategist says
MARKET EYES ON FED
The U.S. Federal Reserve’s widely anticipated move to accelerate the end of its bond-buying program is unlikely to lead to volatility in Asian markets, according to a strategist from United Overseas Bank.
The U.S. central bank is holding its monthly monetary policy meeting this week, where it is expected to taper its bond purchases by $30 billion a month starting in January, compared with $15 billion currently. The Fed is also expected to start raising interest rates in 2022.
· Bank of Japan offers huge cash injection to combat rising short-term interest rates
The Bank of Japan offered to pump a combined $97 billion into markets through temporary government bond purchases in a two-day effort to counter a rise in short-term interest rates.
The central bank on Tuesday made two offers, including one to buy bonds worth 2 trillion yen for immediate fund provision. Under another offer, it would buy 7 trillion yen to inject funds for a period between Dec. 15-16.
· Oil prices steady on demand concerns over omicron spread
Oil prices edged higher on Tuesday but price gains were capped due to investor worries about oil demand after renewed restrictions were imposed in Europe and Asia amid a rise in coronavirus cases.
Brent crude oil futures edged higher by 1 cent to $74.40 a barrel by 0113 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 1 cent to $71.30.
· Chinese stocks decline as Weibo shares dive more than 9% on regulatory pressure
Hong Kong’s Hang Seng index led losses, tumbling 1.27%. Tech stocks dipped, with Alibaba down 1.65%, Tencent losing over 1%. JD tumbled more than 2%. The Hang Seng tech index was down about 2%.
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Reference: Reuters, CNBC
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