Gold rises as watchers await US Fed’s decision on tapering

Gold prices edged up on Wednesday, ahead of the US Federal Reserve’s policy signals later in the day on reducing stimulus for the world’s largest economy.

Spot gold rose 0.2percent to $ 1,777.68/ oz by 3.56am GMT, while US gold futures were flat at $ 1,778.00/ oz. In the absence of an official taper signal, gold could get some relief for the near term; however, the downtrend for the month would hold, DailyFX currency strategist Ilya Spivak said. The Fed’s two- day meeting is due to conclude on Wednesday as investors focus on any new signals on when a taper may begin. The US central bank is also likely to provide an outlook on interest rate hikes from the current near zero level. Wednesday’s statement will also offer Fed’s rate projections for 2024 for the first time. “If it looks like over the course of the coming years, basically through the end of 2024, the Fed envisions more than 100 basis points in cumulative rate hikes that would be hawkish, and a negative catalyst for gold,” Spivak said. An eventual interestrate hike would raise the opportunity cost of holding the noninterest- bearing gold. Stocks found support after debt- laden property developer China Evergrande said it would pay some bond interest due on Thursday, though investors stayed nervous. Holdings of SPDR Gold Trust, the world’s largest gold- backed exchange- traded fund, fell 0.1percent to 1,000.79 tonnes on Tuesday from 1,001.66 tonnes on Monday. Silver climbed 1.4percent to $ 22.78/ oz, while palladium gained 0.9percent to $ 1,923.74. Platinum rose 0.3percent to $ 956.61/ oz. Prices rose 4.7percent on Tuesday, its biggest one- day gain since February 10.