The dollar index, which measures the currency against six major peers, rallied 0.41% to 110.62, just below a fresh two-decade high of 110.87.
In global markets, Comex gold futures edged up 0.5% to 1,679.60 per ounce. Global equity markets were volatile as traders also braced for Fed rate decision tonight.
Russia will take necessary steps to defend its sovereignty and will defend territory with all available means, Putin said as he announced a partial mobilization of the country’s population. Defense Minister Sergei Shoigu said 300,000 reservists would be called up under Putin’s order. The move threatened to escalate the conflict further after the Kremlin has moved to stage votes on annexing the regions of Ukraine it still controls.
“The US dollar index and bond yields have already risen in expectations of an aggressive move by the Fed however if the central bank fails to surprise, it is possible that we may see some correction in the US dollar which may lend some support to gold prices," said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
“Market seems to be braced for aggressive moves by the Fed and if that does not materialize, we may see some reversal. Also once the Fed meeting is done, market focus may shift to other central banks who have also increased efforts to control inflation. Bank of England, Swiss National Bank and Bank of Japan are some of the central banks due to hold their meetings this week. While no major surprise move is expected out of other central banks, the extreme positioning of the US dollar against other currencies may also make it vulnerable for a correction if other central banks also take an aggressive approach. Amid other factors, gold is also underpinned by global growth worries, higher inflation pressure and geopolitical issues," Kotak Securities said in a separate note.
“Weighing on gold price is continuing ETF outflows which show weaker investor interest. Gold holdings with SPDR ETF fell by 4.6 tonnes to 953.32 tonnes, the lowest level since March 2020. Gold has already corrected sharply in anticipation of aggressive move by the Fed but if the central bank fails to meet market expectations, it could result in some price recovery," the brokerage added. (With Agency Inputs)
