Gold listless as traders avoid big bets ahead of Fed decision

July 26 (Reuters) – Gold struggled for momentum on Wednesday as traders refrained from making big bets ahead of the US Federal Reserve’s policy decision later in the day.

Spot gold held steady at USD 1,963.99 per ounce by 0546 GMT, while US gold futures were up 0.1% to USD 1,965.20.

“Broader markets are looking for an extended rate pause through the rest of the year, while Fed officials could push back by leaving the door open for one more hike in September or November,” said Yeap Jun Rong, a market strategist at IG.

While most traders see rates holding in the 5.25%-5.5% range in 2023, 35% see a chance for another 25 basis point hike in November, according to CME’s Fedwatch tool.

Gold is highly sensitive to rising interest rates as they increase the opportunity cost of holding non-yielding bullion.

However, “over the medium term, the yellow metal could still retain its upward trend, given that we are in the final phase of the Fed’s tightening cycle,” Yeap said.

The dollar and US Treasury yields were close to their two-week highs from Tuesday, weighing on zero-interest-bearing gold.

Along with policy guidance from the European Central Bank, traders also await second-quarter U.S. GDP data due on Thursday. The US economy was expected to have risen 1.8% during April-June compared to a 2% rise in the first quarter.

Markets will also keep an eye out for the June personal consumption expenditures (PCE) print due on Friday. Core PCE, the Fed’s preferred inflation gauge, was estimated to have climbed 0.2% in June compared to a 0.3% rise in May.

In Asia, business sentiment in Japan picked up in July, ahead of the Bank of Japan’s meeting on Friday. As per the International Monetary Fund, the bank should start preparing for future
monetary tightening. 

Among other metals, spot silver fell 0.4% to USD 24.60 per ounce, platinum rose 0.1% to USD 965.99 while palladium was little changed at USD 1,283.89.

(Reporting by Seher Dareen in Bengaluru; Editing by Sherry Jacob-Phillips, Subhranshu Sahu and Sonia Cheema)