Gold prices were little changed on Wednesday as investors braced for updated interest rate projections and remarks from Federal Reserve Chair Jerome Powell following the central bank’s monetary policy meeting. Spot gold held steady at $1,931.20 per ounce at 1127 GMT, below its highest level since September 5 reached on Tuesday. U.S. gold futures eased 0.1% to $1,952.50.
Analysts expect gold prices to maintain a range trading pattern in the short term. UBS analyst Giovanni Staunovo stated that he expected the Fed to maintain its data-dependent approach and signal that it is too early to cut rates.
The Federal Reserve’s rate-setting committee is widely expected to keep rates on hold in the near term, but their new economic projections will provide insight into whether rates may need to rise further before the end of the year.
The surge in oil prices has added to inflationary pressures and raised expectations that the U.S. central bank will keep rates higher for a longer duration.
However, real Treasury yields have remained elevated, reflecting positioning for a hawkish-pause scenario from the Fed. This cautious sentiment has influenced gold prices, according to Yeap Jun Rong, a market strategist at IG.
The dollar also remained firm ahead of the decision, while market expectations suggest a 40% chance of another rate hike before 2024, according to the CME FedWatch tool.
The Federal Reserve’s interest rate decision and updated projections will be released at 1800 GMT. Powell is scheduled to hold a press conference at 1830 GMT.
Solid demand from central banks, which continue to diversify into gold, is supporting the gold price. Staunovo noted that Chinese demand should be quite solid now with some of the restrictions on imports being lifted.
In other precious metals, spot silver edged up 0.2% to $23.28 per ounce, platinum fell 0.3% to $936.83, and palladium gained 1.6% to $1,279.56.
