Gold steadies below US$4,300 as markets await Fed rate decision
Traders now price in a 92% chance of the US central bank hiking rates
Gold hovered around US$4,290 an ounce on Wednesday as traders awaited the US Federal Reserve's decision on interest rates. Concerns about high oil prices fueling inflation and the likelihood of a rate hike weighed on the precious metal. The 10-year US Treasury yield reached its highest level in nearly two decades, further supporting the expectation of a policy move.
Should the Fed decide to hike rates, gold's role as a non-interest-bearing asset would make it less attractive, potentially pushing its price lower. However, if the central bank holds off on additional hikes or appears indecisive, investors may demand higher yields on long-term bonds, putting further downward pressure on gold. With gold down over 3 percent in September, traders are closely watching the Federal Reserve's statement for any signs of a shift in monetary policy.
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