Gold Prices Rebound Ahead of Fed Rate Decision
Gold prices rebounded on Wednesday as traders adjusted their positions ahead of the Federal Reserve's interest rate decision. The Fed is expected to raise its benchmark interest rate by a quarter-point for the first time since July 2023, with markets pricing in 23 basis points for today and 52 basis points by year-end.
The gold price (XAU/USD) rose 1.30% on the day to around $4,350, helped by a modest pullback in US Treasury yields and a steady US Dollar. The US central bank will announce its decision at 18:00 GMT, followed by Fed Chairman Kevin Warsh's press conference.
The anticipated rate increase reflects growing inflation risks from the energy shock caused by the war in the Middle East. Strategists at ING expect the Fed to deliver a 'consensus 25bp' rate increase to 4.0%, noting that markets are pricing in a quarter-point hike today and more tightening ahead.