| 1:11:13 PM - Tue, Jul 27th 2021 |
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Gold settled beneath the key $1,800 level on Monday with longs in the yellow metal engaging in typical pre-Fed shadow boxing with shorts as taper and rate expectations reared their heads again.
This is going to be a busy week for markets with the Federal Reserve’s monthly policy statement, along with Chairman Jerome Powell’s news conference, on Wednesday.
The Fed aside, on Thursday, investors will also get a first look at second-quarter US GDP, or Gross Domestic Product, which is expected to show the peak of post-pandemic recovery.
Meanwhile, on Friday, the euro zone is to release a slew of data, including reports on inflation, GDP and unemployment.
Front-month gold futures on New York’s Comex settled down $2.60, or 0.1%, at $1,792.20 an ounce.
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Gold longs managed to hold on to the $1,800 territory last week despite the yellow metal posting its first weekly loss in five week amid a disconnect from inflation expectations in the United States.
The Fed’s all-important Federal Open Market Committee isn’t expected to make any policy changes for July, although more details will likely emerge on the tapering discussions that started in June.
The Fed’s policy statement will be scrutinized for any mention of the timeframe for tapering its asset purchase program, although Powell made it clear in his recent testimony to Congress that the U.S. economy still needs the central bank's full support.
In June, policymakers began debating when to start cutting monthly purchases of $120 billion of Treasuries and mortgage-backed securities.
Powell may indicate that while a discussion on tapering has started, there is still time before officials reach a conclusion on what they will do. Policymakers are expected to highlight the risk from the rapidly spreading Delta variant, which investors worry could derail the economic recovery.
Most analysts expect the Fed to give a clearer indication of its plans for scaling back its quantitative easing program at its annual conference in Jackson Hole, Wyoming, in late August, before a formal announcement on tapering later in the year.
Aside from the Fed meeting, investors will get an update on the strength of the U.S. economy with an end-of-month data dump.
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