Bengaluru: Gold prices edged up on Wednesday on uncertainty over the outcome of the Dutch elections, while markets awaited clues on the pace of US interest rate hikes this year.
With an immediate rate increase by the Fed seen as a done deal, investors are focusing on what message the central bank will deliver when it concludes its meeting later on Wednesday.
In December the Fed forecast three rate rises this year. Spot gold edged up 0.3% to $1,201.64 per ounce by 8.43am. US gold futures were down 0.1% at $1,201 per ounce.
“We do not think much will change throughout much of Wednesday ahead of the Fed rate decision and policy statement,” INTL FCStone analyst Edward Meir said. “Our bias is still somewhat constructive on gold given that we think the Fed will shrink from coming across as too aggressive.”
The statement from the Fed, due at 11.30pm on Wednesday, will be followed by a briefing at midnight (IST).
Investors were also focusing on Wednesday’s Dutch elections, which have been boosting gold’s safe-haven appeal.
The Party for Freedom is seen as having little chance of coming to power, but a strong election performance for the group that wants to “de-Islamicise” the Netherlands would fuel worries over a surprise result in French presidential elections in April and May.
“We expect the bullish bias to continue throughout the session as the Dutch election gives the yellow metal a slight safe-haven bid,” said Jeffrey Halley, senior market analyst at OANDA.
Critical support for gold held around $1,180, analysts said.
Prices have fallen over 5% since gold failed to sustain a break above its 200-day moving average resistance at around $1,261 in late February.
In Britain, concerns have increased over a second Scottish independence referendum and the triggering of Article 50, which would formally begin British negotiations to leave the European Union.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.36% to 834.99 tonnes on Tuesday from Monday. Holdings rose for a second straight session after outflows last week.
Spot silver rose 0.5% to $16.92 an ounce.
Platinum was up 0.8% at $939.50, while palladium fell 0.1% to $743. Reuters