To The Moon

Gold prices recovered slightly from recent losses on Monday but remained pinned below key levels as markets awaited more policy tightening measures from the Federal Reserve.

Spot gold rose 0.2% to %1,678.51 an ounce, while gold futures rose 0.2% to $1,687.30 an ounce by 20:03 ET (00:03 GMT).

Bullion prices slumped to 2-½ year lows last week after red-hot U.S. inflation data showed that the Fed was likely to tighten rates by a large margin during a meeting this week, and likely for the remainder of the year.

The data boosted the dollar to near 20-year peaks, and also supported U.S. Treasury yields, which in turn drove capital away from gold. Prices of the yellow metal slumped sharply from 2022 highs as the Fed began hiking rates this year.

Gold now faces an uphill battle to above $1,700- a key support level that it lost for the second time this year last week. Movements in the yellow metal are expected to be muted ahead of the Fed decision this week.

The Fed is widely expected to hike rates by 75 basis points at the conclusion of a two-day meeting, with traders also pricing in the possibility of a 100 basis point hike. The U.S. benchmark interest rate is expected to end the year at over 4%- its highest level since the 2008 financial crisis.

Among industrial metals, copper futures rose 0.4% to $3.5547 a pound, also recovering from steep losses seen last week.

Concerns over waning industrial activity across the globe, amid rising pressure from inflation and interest rates, have severely dented prices of the red metal this year. A slowdown in major importer China has also weighed heavily on copper prices.

But prices of the red metal could be underpinned by tightening supply after a strike in Escondida, the world’s largest copper mine.