Gold steadies as investors bet against US rate hike in latest Fed meeting

NEW YORK/LONDON — Gold steadied on Tuesday as Federal Reserve policy makers began a two-day meeting that investors are betting will leave interest rates unchanged.

Spot gold was up 0.10% at $1,314.54 an ounce by 3:02 p.m. EDT (1902 GMT), while US gold futures were little changed, having settled up 0.03% at $1,318.20 per ounce.

“We are back in this pattern where the expectations about the next rate hike determine the short- term swings — when they are pushed backwards, gold rises and when they are pulled forward gold declines,” Julius Baer Analyst Carsten Menke said.

“The Fed will prepare markets for a rate hike, possibly in March next year, expectation of which will be positive for the dollar and in turn negative for gold.”

Investors awaited the Fed’s post-meeting statement that was scheduled for release at 2 p. m. EDT Wednesday with Fed Chair Janet L. Yellen’s news conference to follow, when investors will watch for any hint that the central bank could raise rates before the end of the year.

Fed policy makers were set to again cut their forecasts for how high interest rates will need to go in an economy where output, productivity and inflation are growing at a slower pace than in past decades.

Only a 12% chance of a rate rise this week is priced in now, compared with 24% last week, CME FedWatch said.

Increasing US interest rates increase the opportunity cost of holding non-yielding bullion and boost the dollar, making gold more expensive for buyers holding other currencies.

World stock indexes and the dollar edged up as investors awaited the outcomes of not only the Fed’s policy meeting but also that of the Bank of Japan that was set to conclude during Asian trading hours on Wednesday.

“From a technical point of view, the short-term outlook for precious metals has somewhat worsened,” said Capital Economics in a note.

“Indeed, the prices of all metals have now fallen below their 50- day moving averages, albeit still trading above their 200-day moving averages.”

In other news, Swiss gold imports from Hong Kong last month hit their highest since records began in 2012, while combined shipments to Hong Kong and China hit their lowest since April, data from the Swiss customs bureau showed.

Spot silver rose 0.30% to $19.20 an ounce, after a near 2% increase in the previous session.

Platinum was up 0.80% at $ 1,028.90 and palladium fell 0.10% at $682.10. —