Gold gains some positive traction as USD bulls turn cautious ahead of Fed rate decision

Gold prices have gained some traction as the US dollar pauses for a breather ahead of the Federal Reserve's policy decision. According to FXStreet, gold attracts some dip-buyers near the $4,275 region during the Asian session on Wednesday. The US dollar's recent gains have been a significant factor in gold's price movement, as a stronger dollar makes gold more expensive for holders of other currencies.

The Federal Reserve's policy decision, which is expected to be announced later in the day, is widely anticipated to include a rate hike. Business Recorder reports that traders are pricing in a 92.4% chance of at least a 25-basis-point US rate hike. A hawkish Fed could further pull gold down, while any soft messaging may ease bets on hikes and help the metal recover, according to Frank Walbaum, as cited by Business Recorder.

Gold prices have been under pressure due to elevated oil prices and a renewed rise in Treasury yields. Investing.com reports that gold has fallen for two sessions and is now down more than 3% in September. The precious metal is often seen as an inflation hedge, but higher rates increase the opportunity cost of holding non-yielding bullion. As of 0143 GMT, spot gold was at $4,288.48 per ounce, according to Business Recorder.

Brief written by urgent.news from FXStreet, Hindu BusinessLine, Ajel English, Business Recorder, Investing.com — 5 reports on this story. Machine-written — may contain errors; check the original before relying on it.