By Asha Sistla
Jan 27 (Reuters) – Gold prices fell on Wednesday on the appreciation of the dollar, in a session in which the bullion traded in a tight range ahead of the close of a monetary policy meeting of the Federal Reserve, which investors expect Provide more clarity on the monetary stimulus in the United States.
* At 1024 GMT, spot gold was down 0.2% at $ 1,846.06 an ounce, while US gold futures were down 0.3% at $ 1,844.90.
* “To propel gold toward the upper end of the (tight) range, (the Fed) will have to adopt a fairly dovish tone, pushing 10-year yields on US debt below 1% and in turn it will help gold, “said Michael Hewson, analyst at CMC Markets UK.
* The central bank of the United States will announce its decision at 1900 GMT and the market expects it to make no changes to its policy. Investors will be watching Fed Chairman Jerome Powell’s speech for clues about the state of the national economy.
* Expansive monetary policy increases pressure on government bond yields and benefits gold, which does not yield interest.
* Meanwhile, US President Joe Biden’s $ 1.9 trillion stimulus plan has been objected to by Republicans because of its high cost.
* “The $ 1.9 trillion won’t be there and won’t come long before March, so the market will have to get used to the idea of a smaller amount at a later time,” added CMC’s Hewson.
* Doubts about the US stimulus plan also weighed on Treasury yields, as the dollar rallied and was on its way to its best day in nearly two weeks.
* Gold will trade between $ 1,810 and $ 1,870 in the near term, DailyFX strategist Margaret Yang said. He added that in the medium term, the economic recovery could drive yields higher along with inflation, which would be bearish for bullion.
* Silver was down 0.3% at $ 25.35 an ounce, while platinum was down 1% at $ 1,086.72. Palladium was down 0.4% at $ 2,316.13.
(Report by Asha Sistla and Sumita Layek in Bengaluru. Edited in Spanish by Ricardo Figueroa)