By Seher Dareen
(Reuters) – Gold prices edged lower on Wednesday, the downside limited by a weaker dollar, while investors looked forward to the U.S. Federal Reserve’s rate-hike decision and its Chair Jerome Powell’s remarks on monetary policy outlook.
Spot gold was down 0.1% at $1,926.31 per ounce by 1:14 p.m.
ET (1814 GMT), trading in a tight range between $1,920 and $1,933. U.S. gold futures fell 0.2% to $1,941.10.
The dollar, meanwhile, slipped 0.3% against its rivals, making gold less expensive for other currency holders.
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The U.S. central bank is set to issue its policy statement at 2 p.m. EST, followed by a press conference from Powell at 2:30 p.m. EST.
The Fed is largely expected to raise its target interest rate by a quarter of a percentage point, setting aside the rapid hikes used last year to curb a surge in inflation in favour of a more stepwise hunt for a stopping point.
“(The Fed is) probably going to lean a bit hawkish to drive home the point that they’re going stamp out inflation. I think the surprise to the marketplace would be if the Fed lean surprisingly dovish,” said Jim Wyckoff, senior analyst at Kitco Metals.
A more hawkish-than-expected Fed would be bearish for gold, since it could lead to other central banks also staying cautious, weighing on the demand prospects in 2023 for the precious metals markets, Wyckoff said.
Gold is highly sensitive to rising U.S.
interest rates, as these increase the opportunity cost of holding non-yielding bullion.
The European Central Bank and Bank of England hold their monetary policy meetings Thursday.
ADP National Employment report on Wednesday showed a tight labour market despite a low rise in private payrolls, attributing the low rise to bad weather.
Elsewhere, spot silver fell 0.7% to $23.54 per ounce, platinum dipped 1.4% to $996.89 while palladium was down 0.7% to $1,637.40.
(Reporting by Seher Dareen in Bengaluru; Editing by Maju Samuel and Shailesh Kuber)
