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Gold Set for Worst Start to Year in a Decade as Dollar Ascends

Ranjeetha Pakiam and Eddie Spence
·1 min read

(Bloomberg) -- Gold steadied after the Federal Reserve kept its monetary policy unchanged without promising any more aid, supporting the dollar and putting bullion on course for the worst start to a year in a decade.

The Fed repeated it would maintain bond-buying at $120 billion per month until “substantial further progress” toward employment and inflation goals has been made. After the central bank’s first meeting of 2021, Chair Jerome Powell said it would take “some time” to achieve the threshold for altering purchases, making clear the central bank’s not close to tapering them.

Bullion has lost about 3% this month, its worst January performance since 2011, amid gains in the dollar and Treasury yields and as traders weighed prospects for an economic recovery. Powell said that widespread availability of vaccines was grounds for optimism, noting that “several developments point to an improved outlook for later this year.”

“If I look at gold, it seems the market was looking for a more dovish Fed,” said Giovanni Staunovo, an analyst at UBS Group AG. “I still believe we will see a higher price this quarter, supported by low(er) U.S. real rates and a weaker U.S. dollar.”

Spot gold lost 0.1% to $1,841.71 an ounce by 10:45 a.m. in London, after ending 0.4% lower on Wednesday. Silver edged higher, palladium was little changed and platinum fell. The Bloomberg Dollar Spot Index rose 0.2%, touching a one-month high.

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