Dollar Pauses, Gold Holds Steady Ahead of Fed Decision
Gold prices have shown some resilience despite a modest dip in the Asian session on Wednesday. The US Dollar, which had reached a two-week high, has paused for a breather, offering support to gold.
The upcoming Federal Reserve (Fed) rate decision is expected to be a key driver of market sentiment. A 25 basis point interest rate hike is widely anticipated, but traders are more interested in the Fed's updated economic projections and the so-called dot plot.
Energy-driven inflation risks are also on the rise, with crude oil prices hitting a fresh high since May 20 amid concerns about supply disruption in the Middle East. This has pushed the yield on the benchmark 10-year US Treasury bond beyond the 5% threshold for the first time since 2023.
Escalating tensions between Saudi Arabia and Iran-aligned Houthis in Yemen have also contributed to the safe-haven appeal of the US Dollar, capping gold prices. However, any meaningful appreciation for gold seems limited ahead of the key FOMC rate decision.