Gold prices inches up ahead of US Federal Reserve’s policy signals later Wednesday on reducing stimulus.
Spot gold climb to $1,777.68 per ounce by 0356 GMT, while US gold futures recotded flat at $1,778.00.
Gold could get some relief for the near term however the downtrend for the month would hold In the absence of an official taper signal, DailyFX currency strategist Ilya Spivak said.
Spot gold may retest support at $1,744. Fed’s two-day meet is due to conclude on Wednesday as investors focus on any new signals on when a taper may begin.
US central bank is also likely to provide an outlook on interest rate hikes from the current near zero level.
Wednesday’s statement will also offer Fed’s rate projections for 2024 for the first time. “If it looks like over the course of the coming years, basically through the end of 2024, the Fed envisions more than 100 basis points in cumulative rate hikes that would be hawkish, and a negative catalyst for gold,” Spivak said.
An eventual interest rate hike would raise the opportunity cost of holding the non-interest bearing gold.
Stocks found support after debt-laden property developer China Evergrande said it would pay some bond interest due on Thursday, though investors stayed nervous.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.1% to 1,000.79 tonnes on Tuesday from 1,001.66 tonnes on Monday.
Silver climbed 1.4% to $22.78 per ounce, while palladium gained 0.9% to $1,923.74.
Platinum rose 0.3% to $956.61. Prices rose 4.7% on Tuesday, its biggest one-day gain since Feb. 10.
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