Gold prices inch lower amid hawkish Fed fears
Investing.com-- Gold prices fell slightly on Wednesday as traders kept clear of big bets before an interest rate decision from the Federal Reserve later in the day, with a recent rise in inflation brewing concerns over a potentially hawkish outcome.
Increased uncertainty before the Fed meeting saw gold catch some bids in recent sessions, helping prices stay well above the $1,900 an ounce level. But bigger gains were limited by a stronger dollar, which traded close to six-month highs.
Spot gold fell 0.1% to $1,930.22 an ounce, while gold futures expiring in December fell 0.1% to $1,950.95 an ounce by 00:28 ET (04:28 GMT).
Stronger U.S. Treasury yields also weighed on gold, as markets positioned for a hawkish outlook from the Fed.
The Fed is widely expected to keep interest rates on hold at the conclusion of a two-day meeting later on Wednesday.
But a recent upswing in inflation, which was driven chiefly by higher oil prices, may elicit a more hawkish outlook from the central bank. The Fed has still left the door open for at least one more rate hike this year, which it could signal later in the day.
Even if the Fed signals no more hikes, it is expected to keep interest rates at over 20-year highs until at least mid-2024, presenting a muted outlook for gold and other non-yielding assets.
High interest rates push up the opportunity cost of investing in gold- a trade that had battered the yellow metal through the past year.
Beyond the Fed, interest rate decisions in the UK and Japan are also on tap this week.
Among industrial metals, copper prices fell slightly on Wednesday, extending losses into a fourth straight session amid pressure from the dollar and uncertainty over major importer China.
Copper futures fell 0.3%
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