Gold traded in a narrow range on Wednesday as market participants awaited the U.S. Federal Reserve’s monetary policy decision and developments around a coronavirus stimulus package in the world’s largest economy.
Spot gold was down 0.1% to $1,848.60 per ounce by 0744 GMT. U.S. gold futures eased 0.2% to $1,846.60.
“Gold appears to be in a holding pattern as investors are waiting for the Fed,” said Jeffrey Halley, a senior market analyst at OANDA.
The U.S. central bank is expected to stand pat on policy when it announces its decision at 1900 GMT. Investors will be watching for comments from Fed Chairman Jerome Powell for clues on the state of the economy.
“If Powell remains ultra-dovish and indicates they have no intention of tapering, that can boost gold up to $1,880, although if he sounds optimistic about the economic recovery, gold can touch near $1,800 levels,” Halley said.
Easy monetary policy adds pressure on government bond yields and benefits non-yielding gold.
Also in focus was U.S. President Joe Biden’s $1.9 trillion stimulus plan, which has been met with objections from Republicans over the price tag.
“The new round of fiscal stimulus may not arrive before mid-March, which is later than what the market had expected… so eventually we may see a delayed and smaller stimulus, which is not good for gold,” said DailyFX strategist Margaret Yang.
Gold will trade range-bound between $1,810 and $1,870 in the near term, Yang said, adding that in the medium term, the economic recovery might push yields higher along with inflation, which would be bearish for bullion.
Lending some support to gold were worries over a surge in global coronavirus cases, which surpassed 100 million, as countries struggle with vaccine shortfalls.
Silver fell 0.3% to $25.37 an ounce, platinum shed 0.7% to $1,091.01 and palladium eased 0.4% to $2,316.60.
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