Gold futures were under some selling pressure on Wednesday amid a moderate pullback in stocks, but some experts predict a rebound in bullion prices as questions remain about the state of the economy and high valuations on stock markets.
Commodity investors may gain more insight into the outlook for both markets after the Federal Reserve releases its March policy meeting at 2:00 pm ET, about half an hour after gold settles.
Market participants are looking for clues to the Fed’s view of inflation and the possibility that the central bank may soon scale back its market-stimulating bond buying program as a first step towards normalizing monetary policy.
Over the past five days, gold prices have recovered slightly from a 12-month low in early March.
“The attitude of traders and investors remains very optimistic in the middle of the week, which is negative for safe-haven metals,” wrote Jim Wyckoff, senior analyst at Kitco.com.
“However, gold and silver losses are likely to be limited in the near future as the near-term technical condition of both metals has improved recently,” he said.
June gold GCM21,
on the Comex traded from $ 6.20, or 0.4%, to $ 1,736.80 an ounce on the Comex after rising 0.8% on Tuesday, recording the fourth straight gain and coinciding with the longest chain of gains since the end of the same period Feb 10, FactSet data shows.
Some commodity experts believe that gold movement could be limited if investors doubt that stock markets will continue to hit record levels.
“Market players believe that most of the good news is already in the stock market and now it may be time for investors to take a break,” writes Naim Aslam, chief market analyst at AvaTrade. “The fears about inflation are real, and they are further exacerbating the dynamics of gold prices, – said the analyst.