Gold flat as investors gear up for Fed verdict

Gold prices were little changed in early Asian hours on Wednesday as investors strapped in for the U.S. Federal Reserve’s interest rate decision and policy outlook later in the day.

FUNDAMENTALS

* Spot gold was flat at $1,980.58 per ounce, as of 0059 GMT. U.S. gold futures edged 0.1% higher to $1,995.80.

* The Fed’s rate-setting policy committee will release its policy statement and interest rate decision at 1900 GMT, followed by Chair Jerome Powell‘s press conference at 1930 GMT.

* Investors will be looking out for comments from Powell that could shed more light on the Fed’s monetary policy outlook amid expectations of rate cuts in the first half of 2024.

* Traders widely expect the Fed to leave rates unchanged at 5.25%-5.50% this week and are pricing in about a 75% chance of a rate cut in May, according to CME FedWatch Tool.

* Gold, which pays no interest, tends to benefit when interest rates fall as this reduces the opportunity cost of holding bullion.
* The U.S. consumer price index (CPI) edged up 0.1% last month after being unchanged in October, the Labor Department’s Bureau of Labor Statistics said on Tuesday. In the 12 months through November, the CPI increased 3.1% after rising 3.2% in October.
* Market participants also awaited the European Central Bank and the Bank of England’s policy meetings on Thursday.

* The dollar index, meanwhile, remained on the back foot versus major rivals, making gold less expensive for other currency holders.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.33% to 875.65 tons on Tuesday from 878.54 tons on Monday.

* Spot silver was flat at $22.74 per ounce, while platinum eased 0.3% to $926.68 and palladium fell 0.2% to $977.21.