Gold prices on track for third monthly profit in row

Gold prices fell in European trade for the fourth straight session, hitting two-week lows on profit-taking off nine-month highs while the dollar rebounds. 

Despite the decline, the precious metal is heading for the third monthly profit in row as the dollar swoons on prospects of a slower policy tightening pace by the Fed. 

Gold Prices Today

Gold prices fell 0.9% to $1,904 an ounce, the lowest since January 19, with a session-high at $1,927. 

Gold prices lost 0.3% yesterday, the third loss in a row on profit-taking off nine-month highs at $1,949.

The Dollar

The dollar index rose 0.3% on Tuesday, extending gains for the fourth straight session and hitting two-week highs at 102.60 against a basket of major rivals.

Dollar's recovery comes on short-covering while US 10-year treasury yields rebound. 

Monthly Trades

Gold prices are up 4.5% so far in January on track for the third monthly profit in row, the longest such streak of gains since April 2020.

Such gains after two years of heavy losses are due to expectations the Fed will end its cycle of policy tightening and rate hikes soon, sending the dollar sharply down. 

The Fed

The Federal Reserve is convening this week to decide on policies, expected to issue a reduced rate hike of 0.25% this time around.

Actual Demand

Chinese government noted that the current wave of Covid 19 infections in China is getting to an end if no major outbreaks occurred during the lunar near year holiday.

Thus it's expected for actual demand on gold to improve as Chinese economy opens up once more.

The SPDR

Gold holdings at the SPDR Gold Trust fell 1.44 tones yesterday, the second decline in a row to a total of 917.06 tones, a two-week low. 

Will gold prices give up $1,900? 

Most commodity analysts don't expect gold prices to fall below $1,900 ahead of the Federal Reserve's meeting decisions, and if the meeting resulted in signals of ending policy tightening, gold prices are expected to pierce the $1,950 barrier.