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MTECHTIPS:-Gold remains near 3-months highs in cautious trade ahead of Fed decision
Gold inched down on Wednesday remaining near three-month highs in cautious trading ahead of the first monetary policy statement by the Federal Reserve since the U.S. central bank lifted interest rates at a historic meeting last month. On the Comex division of the New York Mercantile Exchange, gold for February delivery traded in a tight range between $1,116.30 and $1,122.50 an ounce, before settling at 1,117.30, down 3.30 or 0.29% on the session. It came one session after gold spiked more than $15 an ounce or 1.2% to reach its highest level since early-November. For the month, gold has risen more than 5% in value as a continued downturn in oil prices and weak data in China has exacerbated fears of a potential global recession. Gold likely gained support at $1,046.20, the low from December 3 and was met with resistance at $1,138.70, the high from Nov. 2. When the Federal Open Market Committee (FOMC) releases its January monetary policy statement at 2 p.m. EST, the central bank is widely expected to leave the target range on its benchmark Federal Funds Rate unchanged at 0.25 to 0.50%. In December, the FOMC abandoned a seven-year zero interest rate policy by unanimously approving its first rate hike in nearly a decade. The Fed Funds Rate is the rate at which banks offer on overnight, interbank loans at the Federal Reserve Bank of New York. While U.S. job growth has continued to expand at a steady pace over the last three months, long-term inflation, the second leg of the Fed’s dual mandate, remains far below its objective. Last month, the U.S. Department of Labor reported that its Consumer Price Index(CPI) for all items declined 0.1%, slightly below forecasts for a flat reading. Meanwhile, the Core Personal Consumption Expenditure (PCE) index, hovered at 1.3% in November, sharply under the Fed’s targeted goal of 2%. The Core PCE index, which strips out volatile food and energy prices, is the Fed’s preferred gauge of inflation.
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