Gold ticks higher as investors brace for Fed rate verdict

GOLD prices edged higher on Wednesday (Mar 22) as the dollar eased, while investors kept a close watch on the US Federal Reserve’s interest rate decision and policy outlook.

Spot gold was up 0.2 per cent at US$1,942.96 per ounce, as of 0036 GMT. US gold futures firmed 0.3 per cent to US$1,946.20.

Gold prices dropped about 2 per cent on Tuesday, as easing worries over a banking crisis prompted some investors to cautiously return to riskier assets.

Investors now keenly await the Fed’s rate decision due later in the day, with a 25-basis-point (bps) rate hike expected, according to the CME FedWatch tool.

Gold is traditionally considered a hedge against inflation, but higher rates increase the opportunity cost of holding the non-yielding asset.

The dollar index was down slightly, making bullion less expensive for buyers holding other currencies.

Markets will also take stock of the February UK inflation data, also due on Wednesday ahead of the Bank of England’s monetary policy decision on Thursday.

US Treasury Secretary Janet Yellen told bankers on Tuesday that she is prepared to intervene to protect depositors in smaller US banks suffering deposit runs that threaten more contagion amid the worst financial system turmoil in more than a decade.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.16 per cent to 923.11 tonnes on Tuesday from 924.55 tonnes on Monday.

SEE ALSO

Gold prices ease as market focus turns to US Fed meeting

Spot silver rose 0.3 per cent to US$22.43 per ounce, platinum was 0.4 per cent higher at US$972.53 and palladium gained 1 per cent to US$1,401.54. REUTERS