By Brijesh Patel
(Reuters) -Gold prices rebounded on Wednesday as caution sets in ahead of the U.S. Federal Reserve policy decision later in the day, while a pullback in the dollar and U.S. Treasury yields prompted some bargain hunting.
Spot gold was up 1% at $2,307.88 per ounce as of 10:06 a.m. ET (1406 GMT), after hitting its lowest level since April 5 earlier in the session.
U.S. gold futures rose 0.7% to $2,318.50.
The dollar eased 0.2% after hitting a near six-month high, making gold less expensive for other currency holders, while benchmark U.S. 10-year bond yields also crept lower. [USD/] [US/]
“There is a little more uncertainty about the global economy and along with geopolitical tensions and the uncertainty regarding the political elections, there’s just a lot that are working in favor of gold,” said Chris Gaffney, president of world markets at EverBank.
Gold hit a record high of $2,431.29 on April 12, due to strong purchases by central banks and demand from Chinese retail investors.
However, prices have fallen more than 5% since then amid cooling Middle East tensions and fading expectations for early U.S. interest rate cuts this year.
“Higher rates for longer, which would typically be negative for gold, but investors are able to push that to the back burner and are looking at things that are actually more supportive of gold right now,” Gaffney added.
The U.S. central bank’s policy decision is due at 1800 GMT followed by remarks from Chair Jerome Powell. The Fed is expected to hold its benchmark interest rate steady at 5.25% to 5.5%.
Data showed U.S. private payrolls increased more than expected in April, suggesting that the labour market maintained its momentum early in the second quarter.
Traders have recently pared back bets of Fed rate cuts this year due to hotter-than-expected U.S. economic data and sticky inflation.
Spot silver rose 1% to $26.54 per ounce and platinum climbed 2.6% to $957.70. Palladium was steady at $947.75.
(Reporting by Brijesh Patel in Bengaluru; Editing by Vijay Kishore)
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