By Kavya Guduru
(Reuters) – Gold prices stalled on Wednesday as caution ahead of the U.S. Federal Reserve’s policy decision due later in the day held investors back from making large bets.
Spot gold edged 0.1% lower to $1,808.79 per ounce, by 1:12 p.m. ET (1812 GMT). U.S. gold futures fell 0.3% to $1,820.00.
“Today’s small drop is simply profit-taking after that rally, ahead of a question mark which is the Fed this afternoon,” said David Meger, director of metals trading at High Ridge Futures.
Gold prices had jumped over the key $1,800 per ounce level in the previous session to their highest in more than five months after data showed a smaller-than-expected rise in U.S. consumer prices.
The Fed’s decision is scheduled at 2 p.m. ET (1900 GMT), followed by a press conference from Fed Chair Jerome Powell. The U.S. central bank is widely expected to increase rates by 50 basis points.
“Any dovish comment coming from policy makers could give new fuel to gold’s recovery,” Carlo Alberto De Casa, external analyst at Kinesis Money, said in a note.
“Vice versa, hawkish rhetoric could determine a consolidation phase or some moderate correction, even if the main trend still appears positive.”
Lower rates tend to boost gold prices as they cut the opportunity cost of holding non-yielding bullion.
“The market is more focused on the end game or the idea that the Fed will be ending its interest rate hike cycle early in 2023. That continues to be the main focus of many of these asset classes, including gold,” High Ridge Futures’ Meger said.
Meanwhile, the dollar hovered near its lowest in six months, making greenback-priced bullion less expensive for overseas buyers. [USD/]
Spot silver rose 0.9% to $23.93 per ounce, platinum fell 0.5% to $1,028.10, and palladium lost 0.9% to $1,913.25.
(Reporting by Kavya Guduru in Bengaluru; Editing by Anil D’Silva, Sherry Jacob-Phillips and Shounak Dasgupta)
