Gold wavers around S$4,300 as traders await Fed rate decision
Traders now price in about a 95% chance for the Fed to hike rates on Wednesday
Gold prices floated around US$4,300 on Wednesday as traders awaited the US Federal Reserve's rate decision. Elevated energy prices and inflation concerns kept speculation for a rate hike alive. Bullion rose 0.2% to trade above the US$4,300 mark. The surge in oil prices has heightened inflation fears and driven bond yields higher, making gold less attractive due to its lack of interest.
Analyst Ryan McKay noted that near-term weakness could present a buying opportunity, given the long-term drivers behind bullion, such as central bank purchases and the risk of US dollar devaluation. The 10-year US Treasury yield hit its highest level in nearly two decades on worries about inflation and the increased borrowing demands of government and corporations.
Crude oil continued its upward trend, with Saudi Arabia's East-West pipeline still disrupted due to attacks last week. Spot gold closed at US$4,306.57 an ounce in New York, having dropped by 0.9% earlier in the day. Silver increased by 1% to US$63.88 an ounce, while platinum and palladium also rose. The Bloomberg Dollar Spot Index, a measure of US currency strength, rose by 0.2%.
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