Gold prices were largely steady on Wednesday as investors awaited the U.S. Federal Reserve’s policy decision and comments from Fed Chairman Kevin Warsh for clues on inflation and interest rate outlooks.
Alexander Manzyuk | Anadolu Agency | Getty Images
Gold prices were largely steady on Wednesday as investors awaited the U.S. Federal Reserve’s policy decision and comments from Fed Chairman Kevin Warsh for clues on inflation and interest rate outlooks.
Spot gold was little changed at $4,029.08 per ounce by 0301 GMT. U.S. gold futures for August delivery dipped 0.2% to $4,028.10.
“Gold is very much connected to today’s FOMC meeting…. The scenario that may see a potential reversal of the recent bearish bias in gold prices will be the Fed turning to a less hawkish rhetoric,” said Kelvin Wong, a senior market analyst at OANDA.
The Fed’s policy decision is due at 1800 GMT, while Kevin Warsh’s comments are scheduled for 1830 GMT.
Market expectations indicate a 70% chance that the central bank will hold rates steady and a 30% probability of a 25 basis points hike, according to the FedWatch tool. Markets are pricing in a 76% chance of an increase in September.
Meanwhile, the Bank of England and the Bank of Japan are widely expected to keep rates unchanged on Thursday and Friday, respectively, and caution against rising inflation.
Gold is seen as a hedge against inflation, and higher rates increase the opportunity cost of holding the non-yielding metal.
On the geopolitical front, the U.S. military said on Tuesday it intercepted multiple ballistic missiles launched by Iran towards U.S. forces in the Middle East in what Washington cast as “an attempted surprise attack” by Tehran.
Iran’s Revolutionary Guards later said they fired several ballistic missiles at a U.S. air base and a U.S. military Central Command center in Jordan.
Oil prices drifted higher, supported by shrinking U.S. crude inventories.
Commerzbank on Tuesday lowered its year-end gold price forecast to $4,500 per troy ounce and said it expects silver to reach $67 per troy ounce by the end of the year.
Spot silver gained 0.9% to $57.65 per ounce and platinum inched 0.3% higher to $1,600.40. Palladium fell 0.7% to $1,261.
