Gold prices rose on Wednesday, buoyed by a softer U.S. dollar, though prices were range-bound as investors were cautious ahead of the U.S. Federal Reserve’s policy decision later in the day.
Spot gold was up 0.4 percent to $1,723.28 per ounce at 0845 GMT.
U.S. gold futures rose 0.3 percent to $1,722.10.
The U.S. central bank is expected to raise interest rates by another 75 basis points (bps) at the conclusion of its two-day policy meeting later on Wednesday, as it attempts to bring down inflation.
More than the rate hike, the focus is on the guidance from Fed chairman Jerome Powell, and gold is likely to retest lows in the absence of a dovish pivot, said Michael Hewson, chief market analyst at CMC Markets UK.
Higher interest rates increase the opportunity cost of holding non-yielding bullion.
Gold prices have dropped more than $300 since climbing past the $2,000-per-ounce level in early March, due to the Fed’s rapid rate hikes and the dollar’s recent rally.
The dollar, however, eased on the day, increasing gold’s appeal among buyers holding other currencies.
"Most are expecting a 75 basis point increase tonight and I think that has already been priced,” said Brian Lan, managing director at dealer GoldSilver Central.
Everyone now wants to know what other tools the Fed is going to use to support the economy or if it is just going to be focused on bringing down the high inflation, Lan added.
The International Monetary Fund cut global growth forecasts again on Tuesday, warning downside risks from high inflation and the Ukraine war were materialising and could push the world economy to the brink of recession if left unchecked.
Spot silver rose 0.8 percent to $18.74, platinum added 0.3 percent to $876.49, and palladium gained 0.6 percent to $2,022.02.
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