Fed Decision Looms Over Gold Prices Amid Interest Rate Hike Bets
Gold prices slipped lower on Wednesday as investors remained cautious ahead of the Federal Reserve's monetary policy decision, which is expected to include an interest-rate hike.
The US Federal Reserve's decision will be followed by a press conference with Chairman Kevin Warsh. Analyst Frank Walbaum noted that a hawkish stance from the Fed could push gold prices lower, while any dovish remarks could ease rate-hike bets and help the metal recover.
Market participants are also keeping an eye on oil prices and developments in the Middle East. Gold is often viewed as a hedge against inflation, but higher interest rates increase the opportunity cost of holding the precious metal, which does not generate income.
The dollar held onto its recent gains, while oil prices remained above $100 a barrel. A stronger dollar makes dollar-priced gold more expensive for holders of other currencies, while elevated oil prices add to inflationary pressures.