Gold prices edge up on weaker stocks, dollar ahead of Fed meeting

Gold inched up on Monday as Asian stocks fell and the dollar eased ahead of a U.S. Federal Reserve policy meeting that could give clues on the pace of interest rate hikes over the rest of the year.

With the Fed widely expected to raise interest rates at its two-day meeting that ends on Wednesday, the focus will be on any fresh hints on the pace of further tightening in the months to come and next year, and any further details on its plans for trimming its balance sheet.

The focus is on whether the Fed is looking at three or four rate hikes this year, according to Argonaut Securities analyst Helen Lau.

Higher interest rates tend to boost the dollar and bond yields, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion. “With the UK event risk successfully negotiated, it would appear the market is putting more emphasis on this week’s FOMC- Federal Open Market Committee- rate hike,” said Jeffrey Halley, a senior market analyst with OANDA, adding that markets had priced in an almost 100 percent chance the Fed would lift rates.

The market is also anxious to see if the Fed becomes more dovish in its outlook, he said.