Gold steadies

BENGALURU. — Gold prices were steady yesterday as investors awaited the start of a two-day US Federal Reserve meeting where the central bank is widely expect to raise interest rates.

Signs of an uptick in inflation and continued strength in the US jobs market is expected to convince the Fed to increase rates when the meeting concludes today.

The bank will release a statement at 6pm GMT that day followed by a briefing at 6.30pm GMT. While an increase in US rates is expected, signs of more rate rises in 2017 could weigh on gold as investors abandon the non-yielding yellow metal to seek higher returns in other assets.

“At this moment, a possible interest rate increase will not be a surprise, so any overreaction ( to an increase in rates) is unlikely,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.

“People will look for some clues on whether the interest rate hike cycle will develop more rapidly than expected.”

In December 2015, the Fed raised its benchmark rate for just the second time since the financial crisis of 2007-09 and forecast three rate rises in 2017. Spot gold was mostly unchanged at $1 203,16 per ounce at 3.24am GMT. US gold futures were also steady at $1 203,30 per ounce.

Investors are also focusing on today’s Dutch elections. The chance of a eurosceptic party coming to power in the Netherlands is seen as small, but a strong election performance could fuel speculation of a surprise result in French presidential elections in April and May. — Reuters.