SYDNEY, (Reuters) – Gold hurtled to record peaks yesterday before the sheer scale of its gains drew a burst of profit taking, which lifted the dollar from two-year lows and curbed early equity gains.
The precious metal had stormed almost $40 higher at one point to reach $1,980 an ounce, only for a wave of selling to slap it back to $1,947 in wild trade.
Gold is still up over $130 in little more than a week as investors wager the Federal Reserve will reaffirm its super-easy policies at a policy meeting this week, and perhaps signal a tolerance for higher inflation in the long run.
“Fed officials have made clear that they will be making their forward guidance more dovish and outcome-based soon,” wrote analysts at TD Securities.
“The chairman is likely to continue the process of prepping markets for changes when he speaks at his press conference.”
One shift could be to average inflation targeting, which would see the Fed aim to push inflation above its 2% target to make up for years of under-shooting.
The pullback in gold took some steam out of stocks but MSCI’s broadest index of Asia-Pacific shares outside Japan was still up 0.8%.
