By Peter Nurse
Investing.com - Gold prices posted gains Wednesday, ahead of the latest Federal Reserve meeting, with investors expecting a continued loose monetary policy.
At 10:05 AM ET (1405 GMT), gold futures on New York’s COMEX gained 0.5% to $1,730.75 per ounce.
The Fed is scheduled to unveil the details from its two-day policy meeting Wednesday, amid optimism for further stimulus measures for the U.S. economy to help it down the road towards economic recovery from the Covid-19 virus.
“The expectations of further Fed stimulus are in the forefront of what’s been supporting gold over the last couple of days. In addition, we’re also seeing global equities tick lower slightly across the board,” David Meger, director of metals trading at High Ridge Futures, told CNBC.
And despite Friday’s nonfarm payrolls shock, it’s easy to see why more stimulus could be required.
The National Bureau of Economic Research declared earlier this week that the U.S. economy had entered a recession in February, bringing to an end the longest period of economic expansion in U.S. history.
While, earlier Wednesday, the Organization for Economic Cooperation and Development said the global economy is on track for the worst recession outside of wartime in 100 years.
The organization predicted that growth in the United States would contract by 7.3% in 2020 if there isn’t a second wave of the coronavirus, and by 8.5% if there is.
Goldman Sachs (NYSE:GS) looks for gold to reach $1,800 per ounce on a 12-month basis, but also sees the tail risk of above-target inflation as a potential driver for prices to climb beyond $2,000.