NEW YORK (CNBC) - Gold prices rose on Wednesday as the dollar weakened, but they held to a tight range with investors reluctant to place big bets before the U.S. Federal Reserve’s rate decision later in the day.
Spot gold rose 0.5% to $1,655.06 per ounce, while U.S. gold futures gained 0.5% to $1,658.50.
The Fed is due to release its policy statement at 2 p.m. EDT (1800 GMT) and is widely expected to raise its benchmark overnight interest rate by 75 basis points, the fourth such increase in a row.
Traders will be looking out for the Fed’s commentary on future rate hikes amid growing optimism that the U.S. central bank will slow rate increases from December.
“Should the Fed pivot narrative be vindicated this week, then spot gold would have a high chance of touching $1,700 over the immediate term,” said Han Tan, chief market analyst at Exinity.
“Gold bulls’ shoulders would slump if the Fed quashes the notion that policymakers are letting up in their ongoing battle against inflation,” Tan added.
The dollar index dipped 0.3%, making gold less expensive for overseas investors.
Data on Tuesday showed U.S. job openings unexpectedly rose in September, highlighting a resilient labor market.
“If we do get any sort of story for dollar weakness over that 50-basis-point hint from the Fed, then it shouldn’t be too hard for gold to get back up to $1,670, $1,680 even over the coming sessions,” said City Index analyst Matt Simpson.
The decline in euro zone manufacturing activity meanwhile was sharper than initially estimated last month, indicating that the sector is in recession, as cost of living crisis put a big dent in demand, a survey showed.