Gold edges up ahead of Fed's decisions

Gold prices rose in European trade for the first session in three days as the dollar lost ground and amid modest haven demand on the precious metal.

Now investors await the Fed's policy decisions later today, expected to increase interest rates by 25 basis points.

Prices Today

Gold prices rose 0.35% to $1,946 an ounce, with a session-low at $1,934, after losing 1.9% yesterday, the second loss in a row, and the largest since February 3 on active profit-taking off one-year highs at $2,009.

The precious metal sustained heavy losses yesterday as US 10-year treasury yields rebounded, pressuring non-yielding assets. 

US Treasury Secretary Janet Yellen said the US banking system is stable but it might require more steps of support if the deposits became under pressure.

The Dollar

The dollar index fell 0.2% on Wednesday, sharpening losses for the fifth straight session, and plumbing five-week lows at 102.98 against a basket of major rivals.

The decline comes as haven demand on the greenback slowed down with the global banking crisis easing following UBS's acquisition of Credit Suisse.

The Fed

Markets are pricing in a 89% chance of a 0.25% rate hike today by the Fed, while chance of no change in rates standing at 11%.

The Federal Reserve

The Fed is expected to showcase more clues about the expected final neutral levels for interest rates this year as inflation is brought back under control.

Estimates

Analysts believe the markets to still be volatile, but bleeding from the banking sector was stymied following urgent interventions from authorities, in turn hurting the haven appeal of gold.

Traders are monitoring the Federal Reserve's tone about policies today to determine the path forward for gold prices.

The SPDR

Gold holdings at the SPDR Gold Trust fell 1.44 tones yesterday, the first decline since March 10, to a total of 923.11 tones, giving up 924.55 tones, which was the highest since October 2022.