Gold prices inched lower on Wednesday, pressured by elevated US bond yields and a firmer dollar, but remained within a tight range as markets await the outcome of the Federal Reserve‘s monetary policy meeting.
Spot gold was down 0.1% at $1,728.52 per ounce at 9:54 A.M EDT (1354 GMT). US gold futures also eased 0.1% to $1,728.90.
Benchmark US Treasury yields scaled a new 13-month high, sapping non-yielding gold’s appeal. The dollar index also advanced and raised the cost of holding gold for other currency holders.
All eyes are on a policy statement from the Fed scheduled for release at 1800 GMT, followed by a news conference from Fed Chair Jerome Powell.
“Powell will (likely) state that inflationary pressures will probably be temporary and not that big … that will probably push up 10-year yields, the dollar and hurt gold a bit,” said David Madden, analyst at CMC Markets UK, adding bullion could fall towards $1,600 in the coming months.
Madden, however, said the Fed would likely also signal an intention to maintain low interest rates, cushioning gold’s losses and providing some support.
Gold prices have come under pressure this year as a recent spike in 10-year US Treasury yields weighed on the non-yielding commodity.
“From a technical point of view, a clear climb above $1,740 would open space for further gains, while a decline below the $1,700 mark will show weakness,” ActivTrades chief analyst Carlo Alberto De Casa said.
Silver rose 0.1% to $25.98 an ounce. Palladium fell 0.4% to $2,489.24, having hit a one-year high of $2,520.31 in the previous session, and platinum dropped 1.2% to $1,197.00.