Gold secured its second consecutive day of gains as the dollar dipped ahead of the Federal Reserve’s meeting on Wednesday.
Investors are still waiting for clarity on whether the central bank will begin to taper its asset purchases. Some analysts say a move either way will have a noticeable impact on the price of gold.
At the closing bell, the price of gold futures contracts were up 11.4 points to $1,782.20 (£1,304.08). Spot gold was up 10.6 points to $1,774.60 per ounce.
While the price of precious metals has appreciated so far this week, some analysts say there is still a lot of uncertainty baked into those gains.
“The big question that needs to be answered is will the current market uncertainty change any prospective timeline that the Fed might have when it comes to announcing its tapering of asset purchases,” Michael Hewson, chief market analyst at CMC Markets UK, told CNBC.
If the Fed decides to taper its asset purchases, the price of gold could start to decline, Hewson added.
The central bank is expected to release a policy statement following its meeting Wednesday.
In a research note published on 20 September, Bank of Montreal (BMO) analyst Jackie Przybylowski described gold and other precious metals as a “contrarian opportunity” for upside gains.
“In the near-term, we expect significant volatility in commodity markets, geopolitical actions, and in the macroeconomic outlook; generally is supportive of gold as a potential counter-cyclical investment,” the note says, as quoted by Kitco News.
BMO estimates that gold may reach $1,800 per ounce by Q4 but will drop below $1,670 in 2022 because of increased market volatility and destabilized geopolitical relationships in South America.