Precise Investors Editorial Team
Spot gold was up 0.8% at $4,328.39 per ounce
Gold prices ticked up on Wednesday as oil prices eased, while market participants looked ahead to the U.S. central bank’s policy decision, with a rate hike largely priced in.
Spot gold was up 0.8% at $4,328.39 per ounce, as of 0310 GMT, after scaling a more than one-month low on Monday. U.S. gold futures for December delivery were down 0.9% at $4,369.50.
A hawkish Fed could pull gold down, while any soft messaging may ease bets on hikes and help the metal recover. Traders are also monitoring oil prices and developments in the Middle East, said Frank Walbaum, a market analyst at trading platform Naga.com.
Gold is often seen as an inflation hedge, but higher rates increase the opportunity cost of holding non-yielding bullion.
Oil prices dropped after an unexpected build in U.S. crude inventories, while investors assessed supply risks after Saudi Arabia suspended oil loading at its Yanbu port.
Traders are pricing in a 92.4% chance of at least a 25-basis-point U.S. rate hike later in the day, according to CME FedWatch. The policy decision will be followed by a press conference from central bank Chair Kevin Warsh.
On the geopolitical front, Saudi Arabia repelled an attack, a spokesperson for the Saudi-led military coalition in Yemen said, as fighting spreads in the Middle East.
Commerzbank said it was somewhat surprising that gold prices had not come under greater pressure so far. It noted that gold’s resilience may be supported by persistent fiscal concerns, reflected in higher long-term government bond yields, as well as a recent rise in U.S. political risks.
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