Gold stuck in a narrow range as central bank meetings approach

Gold prices stabilized on Tuesday, supported by a weak dollar, but prices were stuck in a narrow range as investors refrained from making big bets ahead of major central bank meetings.

By 0726 GMT, gold was stable in spot transactions at $1708.35 an ounce, while US gold futures fell 0.3 percent to $1704.80.

The dollar fell 0.5 percent against its rivals, making bullion priced in the US currency less expensive for buyers holding other currencies.

Providing some support for gold, the rate of expectations of the Federal Reserve raising the interest rate by 100 basis points at the policy meeting next week was about 30 percent, according to CME’s FedWatch tool, after expectations reached 80 percent last week.

Market participants now expect the US Federal Reserve to raise interest rates by 75 basis points at its meeting scheduled for July 26-27. The European Central Bank and the Bank of Japan meet on Thursday, and the ECB is widely expected to announce a 25 basis point increase.

Gold is seen as a hedge against inflation, but higher interest rates raise the opportunity cost of holding the yellow metal.

Among other precious metals, spot silver rose 0.4 percent to $18.75 an ounce, platinum fell 0.1 percent to $862, while palladium rose 1.3 percent to $1878.13.