Gold prices struggled to find momentum on Wednesday as investors refrained from taking large positions ahead of the U.S. Federal Reserve’s decision that could provide further guidance on the timing of interest rate cuts .
Spot gold was little changed at $2,286.53 an ounce by 0136 GMT, after falling 2% on Tuesday to its lowest level since April 5.
Bullion prices fell more than $140 after hitting a record high of $2,431.29 on April 12.
U.S. gold futures were down 0.2% at $2,298.30 an ounce.
“Inflation numbers have shown no progress so far in 2024, the Fed will need to backtrack and move towards a more hawkish message and the gold market is taking this into account,” Edward said Meir, analyst at Marex.
Attention is now focused on the policy decision of the US central bank scheduled for 6:00 p.m. GMT, followed by remarks from President Jerome Powell. The Fed is expected to keep its benchmark interest rate at 5.25% to 5.5%.
“If Powell takes a hawkish tone, prices could fall another $30 or $40 between today and the next day,” Mr. Meir said.
Gold is known as a hedge against inflation, but high interest rates reduce the appeal of this non-yielding asset.
Data on Tuesday showed that U.S. labor costs rose more than expected in the first quarter, confirming a surge in inflation at the start of the year that will likely delay a reduction in labor rates. interest later this year.
Chinese financial markets are closed from May 1 to 5 for Labor Day.
Among other metals, spot silver rose 0.2 percent to $26.32 an ounce and platinum rose 0.2 percent to $935.10. Palladium lost 0.6% to $941.43 after hitting its lowest level in almost two months in the previous session.
