Gold turns below $1,720 ahead of Fed’s policy decision

The Gold Index is displaying back and forth moves in a narrow range of $1,713.92-1,721.97 as investors are awaiting the announcement of the fourth consecutive interest rate decision by the Fed. The precious metal has displayed a complete volatility contraction, which indicates that now the monetary policy announcement is the nearest trigger that will fetch auctions in the asset.

The Fed is expected to elevate its interest rates by 75 basis points (bps). This will step up the cost of capital to 2.25-2.50%.

On Tuesday, the release of the US Consumer Confidence failed to bring a significant impact on gold prices. The economic data has decreased consecutively for a third month to 95.7 after the June figure of 98.4. Apart from that, US giant retail chain operator Walmart reported downbeat earnings.

The underperformance of Consumer Confidence and softer earnings by retail giant indicate that retail demand has been hit dramatically by soaring price pressures. No doubt, the US Retail Sales data remained upbeat after landing at 1%, higher than the expectations of 0.6% but they were highly contaminated by runaway inflation.