Gold prices edged lower on Wednesday as market participants remained cautious ahead of the US Federal Reserve’s monetary policy decision, which is widely expected to include an interest-rate hike.
Spot gold fell 0.1% to $4,288.48 an ounce at 0143 GMT, after hitting its lowest level in more than a month on Monday. US gold futures for December delivery also fell 0.1% to $4,328.10 an ounce.
The CME Group’s FedWatch tool currently shows traders pricing in a 92.4% probability of at least a 25-basis-point US rate hike later on Wednesday. The policy decision will be followed by a press conference with Federal Reserve Chair Kevin Warsh.
Frank Walbaum, a market analyst at trading platform Naga.com, said: “A hawkish stance from the Federal Reserve could push gold prices lower, while any dovish remarks could ease rate-hike bets and help the metal recover. Traders are also watching oil prices and developments in the Middle East.”
Gold is often viewed as a hedge against inflation, but higher interest rates increase the opportunity cost of holding the precious metal, which does not generate income.
The dollar held onto its recent gains, while oil prices remained above $100 a barrel. A stronger dollar makes dollar-priced gold more expensive for holders of other currencies, while elevated oil prices add to inflationary pressures.
On the geopolitical front, Saudi Arabia issued security warnings in several areas, including Mecca and Jeddah, the kingdom’s second-largest city, following a week of attacks by Iran-aligned fighters that increased Saudi Arabia’s involvement in the Middle East war.
Among other precious metals, spot silver was unchanged at $63.67 an ounce, platinum fell 0.3% to $1,770.47, while palladium rose 1% to $1,301.61 an ounce.
Source: Reuters
