The Federal Reserve, gold and you

Is the real reason gold is doing so well because investors have lost faith in Fed Chair Jerome Powell? Jim Grant seems to think so. With CNBC's Melissa Lee and the Fast Money traders, Guy Adami, Tim Seymour, Pete Najarian and Dan Nathan. Subscribe to CNBC PRO for access to investor and analyst insights on gold and more: https://cnb.cx/2BT2E7y

Gold gained on Tuesday ahead of a U.S. Federal Reserve policy meeting which is expected to provide more monetary stimulus to support the coronavirus-hit economy, though bullion pulled back from an all-time high reached earlier.

Spot gold was up by 0.3% at $1,947.51 per ounce, while U.S. gold futures rose 0.93 % to $1,949.00 per ounce.

Gold surged to a record high of $1,980.57 an ounce earlier in the session, but prices have retreated as much as 3.7% since then as investors booked profits and the dollar bounced back.

“When you get a strong momentum coming in, you get a lot of speculators who are looking to turn a quick profit,” said Michael Matousek, head trader at U.S. Global Investors.

“Nothing has changed fundamentally at all, the deficits and lower interest rates stoking inflation are still going to be here, so there is no reason not to own gold really.”

Investors now eye the two-day Fed meeting beginning Tuesday, where it is widely expected to reiterate its accommodative policy stance.

The Fed announced extension of several of its lending facilities through the year-end.

Rising pandemic infections, simmering Sino-U.S. tensions, massive stimulus and a low interest rate environment to aid pandemic-hit economies has helped gold rally 28% so far this year.

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