Gold inter-markets: awaits fresh impetus from this week's Fed and BOJ monetary policy decision

After an initial up-tick to $1325 neighborhood, Gold failed to build on to its recovery gains and has now retraced back to currently trade below $1320 region, with only marginal gains. 

During early Asian trading session on Tuesday, the precious metal got an initial boost from slight deterioration in investor risk appetite as depicted by a sharp slide in the USD/JPY pair. The risk-aversion sentiment was further reaffirmed by a down-tick in US longer-term treasury yields (30-year) and slide in the broader US equity index (S&P 500) futures. However, stability in the Volatility Index (VIX) was not reflective of investors drive to safe-haven assets. 

As the day progressed, improvement in risk appetite, as reflected by a slide in VIX, helped S&P 500 to trim its early losses and was accompanied by recovery in US treasury yields and the USD/JPY pair, which eventually dented the safe-haven appeal of the yellow metal. 

Next in focus would be the much awaited Fed monetary policy decision and accompanying statement on Wednesday, which would be looked upon to determine the timing of next rate-hike decision. CME group's Fed Fund futures are now pointing to around 42% probability of such an action in December this year. A hawkish statement would reaffirm expectations of an imminent Fed rate-hike later during the year and could weigh on dollar-denominated commodities - like gold.

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Meanwhile, the BOJ monetary policy decision on Friday also becomes crucial as any disappointment on expectations of additional stimulus measures would trigger a fresh bout of global volatility and eventually benefit the safe-haven appeal of the precious metal.