Gold sits tight ahead of Fed rate hike decision
(Reuters) - Gold drifted in a narrow range on Wednesday as investors awaited the conclusion of a Federal Reserve policy meeting at which the U.S. central bank is expected to raise rates for the first time in nearly a decade.
Spot gold edged up 0.2 percent to $1,062.40 an ounce by 0043 GMT, after closing lower in the last two sessions. Eight years after a devastating recession opened an era of loose U.S. monetary policy, the Fed on Tuesday began a two-day meeting at which it is expected to turn in the other direction and raise rates in an increasingly normal economy.
The decision will be released on Wednesday at 1900 GMT, with markets prepared for an initial 25 basis point "liftoff”. It is to be followed by a news conference by Fed Chair Janet Yellen to elaborate on the central bank's latest policy statement.
Higher rates would dent demand for non-interest-paying gold, while boosting the dollar. Investors have already sent gold down 10 percent this year in anticipation of higher rates and the strength in the dollar. The metal fell to near-six-year lows earlier in the month. Some traders say a rate hike is already priced into gold, and any indications from the Fed that further rate hikes would be slow and gradual could send the metal higher after the Fed meeting. However, any gains could be short lived as other fundamentals are weak. Elsewhere, Venezuelan central bank gold holdings declined in value by 24 percent between January and October, according to a central bank statement.
A leading bullion association in India is offering free membership to jewellers across cities and small towns ahead of a planned launch of the country's first physical gold exchange, a move aimed at standardizing prices and improving transparency. Zimbabwe should reduce the royalty fee levied on platinum producers from the current 10 percent to help mining firms offset the impact of low prices, the country's mining chamber said.