Gold pares losses after Fed holds interest rates steady

NEW YORK/LONDON — Gold gave up some of its losses on Wednesday as the dollar pared gains after the US Federal Reserve held interest rates unchanged at its first meeting since President Donald J. Trump’s inauguration.

In a statement following its two-day meeting, the Fed painted a relatively upbeat picture of the US economy that suggested it was on track to tighten monetary policy this year, though it gave no firm signal on the timing of its next rate move.

“Gold largely recovered the day’s losses after a remarkably bland FOMC statement, which contained no murmurs of upcoming rate hikes or even consideration of balance sheet reduction while providing the barest nod to inflation going back to 2%,” said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

“The three dissenters from 2016 have rotated off and the new, more dovish panel is proceeding cautiously.”

Gold is highly exposed to interest rates, particularly in the United States, as higher rates lift the opportunity cost of holding nonyielding assets and boost the dollar, in which gold is priced.

Spot gold was down 0.08% at $1,209.58 an ounce by 2: 39 p. m. EST ( 1939 GMT), after touching a session low of $1,197.73.

US gold futures settled down 0.30% at $1,208.30 prior to the statement. The dollar index pared gains, rising 0.10%. Gold gained more than 5% in January — its best month since June 2016 — as the dollar suffered its worst start to the year in three decades.

“Gold prices could rise 8% in the first half of the year, aided by a weaker dollar,” ETF Securities said. “However, the dollar strengthening in the second half of the year and subdued enthusiasm for the metal in the futures market could drive a sell-off.”

Spot silver rose 0.20% to $17.56 an ounce, after touching its highest in more than 11 weeks at $17.61. Platinum inched up 0.08% to $995.24, while palladium rose 1% to $760.25.