Gold flat as investors brace for Evergrande risks, Fed policy decision

[BENGALURU] Gold prices were flat on Wednesday amid rising uncertainties triggered by China Evergrande's debt crisis and anticipation of policy cues from the US Federal Reserve on its timeline for reducing stimulus for the world's largest economy.

Spot gold was flat at US$1,775.63 per ounce, as of 1.20am GMT, while US gold futures dipped 0.1 per cent to US$1,776.30.

The Fed's two-day meet is due to conclude on Wednesday as investors focus on any new signals on when a taper may begin.

The US central bank is also likely to provide an outlook on interest rate hikes.

While gold is considered as a hedge against inflation and currency debasement amid widespread stimulus, a hawkish move by the Fed would diminish gold's appeal. An eventual interest rate hike would also raise the opportunity cost of holding the non-interest bearing asset.

Asian stock markets made a cautious start on Wednesday, while the dollar held firm near one-month high.

European Central Bank policymakers still see the recent inflation surge as temporary but a growing number appear to be acknowledging the risk that price growth may exceed their relatively benign projections.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.1 per cent to 1,000.79 tonnes on Tuesday from 1,001.66 tonnes on Monday.

Swiss exports of gold to India jumped to a five-month high in August while shipments to China fell, Swiss customs data showed on Tuesday.

Silver climbed 1.2 per cent to US$22.74 per ounce, while palladium edged 0.2 per cent higher to US$1,910.34.

Platinum was steady at US$954.28. Prices rose 4.7 per cent on Tuesday, its biggest one-day gain since Feb 10.

REUTERS