Gold climbs as traders look for Fed to maintain dovish stance

Gold futures climbed Tuesday as traders looked to a two-day Federal Reserve meeting that’s expected to see policy makers maintain a dovish stance.

Gold for April delivery GCJ9, +0.50% on Comex rose $8.60, or 0.7%, to $1,310.10 an ounce, on track to log the highest finish month to date. May silver SIK9, +0.54% was 9.8 cents higher at $15.42 an ounce, up 0.6%.

“Gold is somewhat firmer this morning in anticipation of a dovish Fed,” wrote analysts at Commerzbank, in a note.

The Fed is widely expected to maintain the tone it adopted in January, when it abruptly put its rate-hike plan on pause and took a wait-and-see approach to future rate moves.

No change in rates is expected, but investors will be focused on the central bank’s policy statement, remarks by Chairman Jerome Powell at his news conference, and policy makers’ forecasts of future rate moves. Of particular interest is whether the Fed will announce plans to bring its balance-sheet runoff effort to an early end. The central bank will make its policy announcement Wednesday.

Traders are also monitoring geopolitical developments, including the U.K.’s efforts to reach a deal on leaving the European Union. Prime Minister Theresa May’s plan to bring her twice-rejected proposed agreement governing the U.K.’s future relationship with the EU to another parliamentary vote this week ran into a parliamentary roadblock on Monday, leading to volatile trade in the British poundGBPUSD, +0.1509% but having little impact on haven-related assets like gold.

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Meanwhile, the ICE U.S. Dollar Index DXY, -0.19% a measure of the currency against a basket of six major rivals, was off 0.2%. A weaker dollar can be seen as supportive for commodities priced in the unit by making them cheaper to users of other currencies.

Palladium futures continued to steam higher a day after notching another record close. June palladium PAM9, +0.74% was up $13.10, or 0.9%, to $1,552.80 an ounce. “The palladium market continues to get support from the prospect of Russian sanctions limiting palladium exports,” said analysts at Zaner Precious Metals.

April platinum PLJ9, +2.22% was up $17.70, or 2.1%, to $851.70 an ounce. “Apparently, Citigroup has suggested that platinum will be the ‘next leg’ of the [platinum group metal] boom,” with the platinum market extremely cheap in its ratio to palladium, according to the analysts at Zaner.

May copper HGK9, +0.72% rose 1.9 cents, or 0.7%, to $2.928 a pound.

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