Gold edges lower on Fed meeting jitters

Sept 21 (Reuters) – Gold prices inched lower on Tuesday, as cautious investors braced for the U.S. Federal Reserve’s guidance for tapering and interest rate hikes, while risk-off sentiment stoked by China Evergrande’s debt woes limited declines in the safe-haven metal.

Spot gold XAU= fell 0.1% to $1,762.08 per ounce by 0340 GMT.

Prices recovered from a more than one-month low of $1,741.86 on Monday as concerns over the fallout from property developer Evergrande’s 3333.HK solvency issues spooked stock markets worldwide and drove investors to safe-haven assets.

U.S. gold futures GCv1 were flat at $1,763.70.

Bullion is considered as a hedge against inflation and currency debasement likely to result from the widespread stimulus. A hawkish move by the Fed would diminish gold’s appeal, while an eventual interest rate hike would also raise the opportunity cost of holding the non-interest bearing asset.

“In the short term, we might see a little bit more upside in gold on the basis that the growth outlook is being reassessed due to the potential knock-on effects of Evergrande situation on China’s growth,” IG Market analyst Kyle Rodda said.

“But in the longer term, they’re still skewed to the downside because we’re going to continue to see the Fed wanting to push towards normalizing monetary policy, which typically is not a good environment for gold.”

Story Courtesy of XM a global leader in forex trading. Check here

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