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Gold remained under some pressure on Wednesday and traded near its lowest level in roughly a month.
Energy prices continue to drive sentiment, influencing the inflation outlook and Treasury yields.
Elevated oil levels are reinforcing concerns that inflation could remain sticky, reducing the likelihood of near-term monetary easing by the Federal Reserve, weighing on gold in the process.
ETF outflows over recent weeks reinforce this shift in sentiment, and could weigh on the market if they continue.
Markets are now focused on the Fed’s monetary policy decision and, more importantly, its economic projections. While interest rates are expected to remain unchanged, any acknowledgement of persistent inflation risks, combined with signs of a cooling labour market, could shape expectations for the timing of future cuts. A more cautious tone would likely support yields and the dollar, maintaining pressure on gold.
Other major central banks in the euro area, Switzerland, Canada and Japan will also set their interest rates in the upcoming days, potentially fuelling some volatility for gold. Still, continued tensions in Eastern Europe and sustained central bank purchases could limit downside risks for the metal, keeping the long-term bullish trend intact.
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