Gold rose on Wednesday helped by a weaker dollar, but caution over the Federal Reserve’s monetary policy tightening plan kept bullion prices in a narrow range.
* Spot gold was up 0.2% at $1,720.57 per ounce by 1100 GMT. US gold futures were little changed at $1,719.60.
* The dollar fell, increasing gold’s appeal to buyers holding other currencies [USD/].
* The market expects the US central bank to raise interest rates by another 75 basis points (bps) at the end of its two-day policy meeting later on Wednesday.
* More than the rate hike, the focus is on Fed Chairman Jerome Powell’s words, said Michael Hewson, chief market analyst at CMC Markets UK.
* Although considered a hedge against inflation, raising interest rates to tame rising prices increases the opportunity cost of holding bullion, which doesn’t pay off.
* “Everybody now wants to know what other tools the Fed is going to use to support the economy or if it’s just going to focus on bringing down high inflation,” said Brian Lan, managing director of dealer GoldSilver Central.
* Gold has lost more than $300 since breaking above the $2,000 per ounce level in early March, as the Fed’s rapid rate hikes and the dollar’s recent rally have overshadowed bullion’s appeal as a safe haven despite recession risks.
Spot silver rose 0.8% to $18.75 an ounce, platinum gained 0.4% to $877.52 and palladium gained 1.1% to $2,031.65.
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