By Anjana Anil
(Reuters) – Gold was little changed on Wednesday as traders waited for the Federal Reserve’s interest rate signals at the end of the U.S. central bank’s meeting and Chair Jerome Powell’s remarks later in the day.
Spot gold hovered around $2,156.60 per ounce by 10:49 a.m. EDT (1449 GMT). U.S. gold futures were also steady at $2,159.80.
“If the (Fed) signals that they’re pushing back rate cuts further than anticipated, we could have a decent sell-off, but with the way gold’s traded, there’s such a resounding safety demand right now in the market,” said Bob Haberkorn, senior market strategist at RJO Futures.
While gold is a traditional inflation hedge, higher interest rates on other assets discourage investment in non-yielding bullion.
Gold prices dipped nearly 1% last week after hotter-than-expected February U.S. consumer prices and producer prices slashed hopes of early Fed rate cuts due to the threat of persistent inflation.
While traders mostly expect the Fed to hold interest rates unchanged at its policy-making meeting, the focus will be on its “dot plot” projections afterwards.
Traders have priced in a roughly 64% chance of a June rate cut, down from 72% seen before last week’s CPI report.
The dollar edged up ahead of the Fed verdict, making gold more expensive for holders of other currencies. [USD/]
Persistent safe-haven demand, central bank purchases and geopolitical tensions continue to provide fundamental support. [GOL/AS]
“We’ve seen a lot of buying from China, and not only from the central bank. There has been demand from retail and other types of investors for gold in China, which has been supportive for the metal,” said David Wilson, commodities strategist at BNP Paribas.
Silver held steady at $24.92. Among platinum group metals (PGMs), platinum was rose 0.4% to $898.30, and palladium gained 0.4% at $997.75.
(Reporting by Anjana Anil in Bengaluru and Polina Devitt in London; Editing by Richard Chang)
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