Gold holds above US$4,000 as traders look to US Fed rate decision

GOLD steadied above US$4,000 an ounce as dip buyers entered the market before the US Federal Reserve’s interest-rate decision due later on Wednesday (Oct 28).

Bullion held a 1.1 per cent gain from the previous session. Oil was flat after a two-day decline as traders tracked the outcome of a tight Israeli election, while stocks were set to gain on renewed enthusiasm for the artificial intelligence trade.

A sell-off in AI-related stocks last week helped push gold to its lowest since mid-July, as investors sold the metal to cover losses elsewhere.

Though gold has dipped below the US$4,000-an-ounce threshold in recent days, physical buyers as well as bargain hunters have helped to arrest a more sustained decline. Support has come from Chinese households’ appetite for bullion, which has grown over the past two months as prices have softened and onshore equities have lost their shine.

The Fed is widely tipped to hold rates steady this week – supportive for gold, which does not pay interest – although traders are pricing in a hike before year-end. Chair Kevin Warsh is set to face a tricky balancing act reassuring investors of the US central bank’s commitment to quashing inflation should the central bank leave rates unchanged.

Spot gold was little changed at US$4,060.73 an ounce at 7.30 am in Singapore. Silver was marginally higher at US$54.44 an ounce. Platinum and palladium rose. The Bloomberg Dollar Spot Index, a gauge of the US currency, gained slightly after adding 0.3 per cent on Tuesday. BLOOMBERG