Gold prices hover near 29-month lows on global central banks

Gold prices fell in European trade, almost hitting 29-month lows as the dollar index gained ground ahead of the Federal Reserve's meeting. 

Gold is also pressured by global central banks, which are expected to keep moving heavily this week to control record inflation, through policy tightening. 

Gold Prices

Gold prices fell 0.9% to $1,659 an ounce, after rising 0.6% on Friday, the first profit in four days away from 29-month lows at $1,654 an ounce. 

Gold prices lost 2.5% last week, the fourth weekly loss in the last five weeks, as US 10-year treasury yields spike following US inflation data. 

The Dollar

The dollar index rose over 0.4% on Monday against a basket of major rivals, pressuring gold futures as they become costlier to other people. 

Such gains come ahead of the Federal Reserve's policy meeting tomorrow, expected to increase interest rates by 75 basis points to 3.25%.

That would be the third such hike, and the fifth overall, in row, as the Fed continues its aggressive attempts to tame inflation. 

Global Central Banks

Aside from Fed's meeting, other major central banks in Britain, Japan, and Switzerland are convening as well next Thursday. 

It's unlikely the BoJ will change its current ultra-easy policies, while the Swiss central bank is expected to raise interest rates by 75 basis points to 0.5%. 

Bank of England is also expected to increase interest rates, either by 50 or 75 basis points. 

Estimates 

Analysts expect prices to hover around $1,680 in the short term, while a steep rate hike by the Federal Reserve is expected to send prices towards $1,650. 

The SPDR

Gold holdings at the SPDR Gold Trust fell 1.16 tones on Friday, to a total of 960.85 tones, near a two-year tones.