Gold prices were stuck in a tight range on Wednesday as investors held back from making large bets ahead of much awaited U.S. Federal Reserve’s rate-hike decision later in the day.
Spot gold was little changed at $1,929.07 per ounce by 1138 GMT, after falling to its lowest since Jan. 19 in the previous session. U.S. gold futures held steady at $1,929.20.
“It’s pretty certain that the Fed is going to hike rates by 25 basis points,” said Michael Hewson, chief market analyst at CMC Markets.
But “the risk is very much towards the downside for gold, because Powell needs to slightly reset market expectations about what’s likely to come afterwards”, he added.
The U.S. central bank is set to issue its policy statement at 1900 GMT, followed by a press conference from Fed Chair Jerome Powell at 1930 GMT.
Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.
However, any hawkish messaging could introduce quite a bit of downside risk, and gold could revisit Tuesday’s lows in the aftermath of the Fed decision, Hewson said.
Elsewhere, spot silver fell 0.7% to $23.5362.
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