Gold falls amid approaching Fed rate decision

Gold prices declined on Wednesday as the Federal Reserve's anticipated rate hike announcement dampened demand for zero-yield bullion.

 

Spot gold decreased by 0.06% to $1,866.73 per ounce. American futures for gold slightly decreased to $1,867.8.

 

Benchmark yield on US 10-year Treasuries strengthened after retreating from a key 3% mark in the previous session, ahead of a widely expected large interest rate hike by the Fed as it tries to contain rising US inflation.

 

The Federal Open Market Committee of the US central bank is set to issue a policy statement at 18:00 GMT, followed by a press conference by Fed Chairman Jerome Powell.

 

Market awaits decision to raise overnight benchmark interest rates and details of Fed balance sheet cut of $8.9 trillion

 

"A 50 basis point uptrend is now valued by the markets ... If the announcement is even more hawkish, gold is likely to come under pressure again," said OANDA Senior Analyst Geoffrey Halley.

 

"If the statement remains largely unchanged in its guidance, then a short-term recovery to $1,880 is possible as the US dollar is likely to fall."

 

The dollar remained close to 20-year highs, making gold less attractive to foreign buyers at the price of the dollar.

 

Russian troops hit targets in eastern Ukraine on Tuesday even as the European Union prepared to impose oil sanctions on Moscow.

 

Ingots are seen as a safe store of value in times of economic and political crises.

 

Spot silver shed 1.04% to $22.32 an ounce, while platinum rose 0.75% to $969.19. Palladium fell 0.23% to $2,250.36.