Small balls of gold collected from the mine are weighed on a scale to calculate payment at a small-scale gold mine in Umguza, Zimbabwe, on Saturday, Nov. 10, 2018. Picture: CYNTHIA R MATONHODZE/BLOOMBERG
Small balls of gold collected from the mine are weighed on a scale to calculate payment at a small-scale gold mine in Umguza, Zimbabwe, on Saturday, Nov. 10, 2018. Picture: CYNTHIA R MATONHODZE/BLOOMBERG

Bengaluru — Gold prices held steady on Wednesday as investors awaited the outcome of the US Federal Reserve’s policy meeting, hoping for details of the central bank’s plans to balance interest rates against its inflation target.

Spot gold was up 0.1% to $1,957.45/oz by 2.55am GMT. US gold futures were steady at $1,966.20.

“People are keeping on the sidelines because of the Fed announcement coming up later today,” said Brian Lan, MD at dealer GoldSilver Central in Singapore. “People are awaiting more clarity on what monetary tools the Fed is expected to use to support inflation above 2%.”

The Fed decision is due at 6pm GMT, followed by a news conference by chair Jerome Powell half an hour later. In August the US central bank adopted a more accommodative approach to inflation and pledged to keep interest rates low for longer. “Markets will want to see if the Fed will modify its language as some expect, perhaps something to the effect that it will keep rates low for a period of time (say three years) or maybe do the same thing with its inflation language,” said Edward Meir, an analyst at ED&F Man Capital Markets, in a note. “But, we doubt the Fed will lock itself into such a fixed language ahead of a potential turn in the US economy.”

Lower US interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion. Gold also is used as a hedge against inflation and currency debasement. Offering support to gold, the dollar index eased 0.1% against a basket of major currencies.

US House of Representatives speaker Nancy Pelosi said Democrats were open to delaying an October recess to get a deal with Republicans on a new coronavirus aid bill.

Elsewhere, silver fell 0.1% to $27.20/oz, platinum dropped 0.7% to $971.11 and palladium slipped 1.4% to $2,375.83.

Reuters

Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.