NEW YORK: Gold gained on Wednesday as Treasury yields and the dollar slipped, while traders positioned for the US Federal Reserve’s interest rate announcement and Chair Jerome Powell’s comments on monetary policy.
Spot gold rose 0.5% to $1,949.42 per ounce by 1:04 p.m. EDT (1704 GMT) after retreating 2% on Tuesday. US gold futures were up 0.6% at $1,953.00.
The decision is expected at 2 p.m. EDT (1800 GMT), and the Fed is largely expected to increase rates by 25 basis points, according to the CME FedWatch tool, while some Wall Street banks are split over a hike or a pause.
Markets are “really pricing out the potential for a prolonged period of elevated interest rates and starting to price in the prospect for the Fed to cut rates potentially as early as this year. So that is certainly a bullish context for gold,” said Daniel Ghali, commodity strategist at TD Securities.
Lower interest rates heighten the appeal of gold, which bears no interest.
The dollar was lower, making gold cheaper for holders of foreign currencies. Benchmark US 10-year Treasury yields eased, aiding demand for non-yielding bullion.
Gold on Monday breached the key $2,000 level in a rally driven by safe-haven demand after the collapse of US-based Silicon Valley Bank and share-fall at Credit Suisse.
On the other side of the Atlantic, euro zone government bond yields rose with ECB hawks calling for more rate hikes.
Silver gained 1.4% to $22.68 per ounce, platinum added 1.1% to $987.93, and palladium advanced 4.1% to $1,444.41.
While strong investment flows into gold have buoyed platinum, palladium rose by virtue of being relatively cheap.