Bengaluru: Gold inched up on Wednesday as the market waited for direction from the outcome of a two-day US Federal Reserve meeting, with the central bank expected to hike interest rates and give indications on its monetary policy for the rest of the year.
The Fed is scheduled to release its interest rate decision at 2pm EDT (1800 GMT) on Wednesday, with chair Janet Yellen due to hold a press conference 30 minutes later.
Higher rates could boost the dollar, making commodities priced in the greenback more expensive for holders of other currencies.
“Most people have already priced in a rate hike in June,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group. “What really matters is the anticipation on further action and whether there will be hints on the extent or the schedule of the shrinkage of the balance sheet as well as other monetary policy actions.”
The central bank could provide more details on its plans to shrink the mammoth bond portfolio it amassed to nurse the economic recovery.
“Gold prices could see a temporary setback, especially with the market currently far underestimating the pace of Fed rate hikes,” Commerzbank said in a note.
Spot gold was up 0.1 per cent at $1,267.05 (Dh4,653.87) per ounce by 0806 GMT. On Tuesday, it touched its weakest since June 2 at $1,259.16.
US gold futures for August delivery were nearly flat at $1,268.90 an ounce.
“With geopolitical risk having receded over the last week, gold is now trading on fundamentals and will be... subject to the nuances of US dollar weakness or strength,” said Jeffrey Halley, senior market analyst at OANDA.
Meanwhile, the testimony of US Attorney-General Jeff Sessions and his refusal to detail conversations with President Donald Trump was deemed a “non-event” by some market analysts.
Sessions’ testimony did not provide any damaging new information on Trump, but his refusal to discuss conversations with Trump raised fresh questions about whether the White House has something to hide.
In the wider markets, the US dollar remained flat and Asian shares turned mixed on Wednesday as investors everywhere awaited clarity on the Fed’s future path.
Among other precious metals, silver was flat at $16.86 per ounce. On Tuesday, it hit its lowest since May 19 at $16.68.
Platinum rose 0.2 per cent to $925.25 per ounce but was close to a near one-month low of $918.50 hit on Tuesday.
Meanwhile, palladium fell 0.1 per cent to $881.55 per ounce.
