Treasury ETF shorts shift toward belly ahead of Fed decision

Gold prices in Dubai edged higher on Wednesday, as oil prices remained elevated and inflation concerns persisted ahead of the Federal Reserve's upcoming policy decision. Compared to the previous day, 24-karat gold was trading at Dh521.25 per gram, representing a Dh3.75 increase overnight. 22-karat gold also showed strength, trading at Dh482.50 per gram.

Throughout September, gold has declined over 3% after reaching above $4,700 an ounce in late August. Currently, gold is hovering around $4,326.82, marking a rise of 30 odd points since the previous trading session. Oil price volatility, driven by uncertainty surrounding the East-West pipeline's status since Saudi Arabia's attacks, contributes to higher bond yields, which in turn put downward pressure on gold's price.

Investors are anticipating a high probability of a Federal Reserve rate hike, with Fed Chair Kevin Warsh expected to pursue tighter monetary policy to combat inflation. Strategist Christopher Wong suggests that should the Federal Reserve proceed with further rate hikes, gold prices could face downward pressure, potentially testing the $4,000 an ounce level.

Oil prices have stabilized following a two-day surge, influenced by uncertainty over the pipeline's operational status and the limited options available to bring the market back into equilibrium. As a traditional safe haven asset, gold continues to be a favored hedge for investors, and silver also showed gains, up 1.93% on Wednesday.

Platinum and palladium experienced slight declines, with 0.2% and 0.1% drops, respectively. The Bloomberg Dollar Spot Index, which gauges the US dollar's strength, saw a marginal 0.1% increase following a 0.6% gain over the past two days.