Gold prices edged higher on Wednesday, supported by a pullback in the dollar, although caution prevailed as investors awaited minutes from the Federal Reserve’s December policy meeting that could offer hints on the US central bank’s tightening path.
Spot gold was up 0.3% at $1,844.85 per ounce, as of 0244 GMT.
US gold futures were up 0.2% at $1,850.10.
The dollar index slipped 0.2%, after scaling a two-week high on Tuesday.
Weaker dollar makes bullion cheaper for other currency holders. “Traders remain cautious ahead of the Fed minutes.
The minutes will likely give an idea about the Fed’s policy decisions and this will impact dollar and gold,“ said Hareesh V, head of commodity research at Geojit Financial Services.
“Ongoing recession concerns and geopolitical tensions are likely to lift gold’s safe-haven appeal in 2023.
There are chances of more inflows to gold when the Fed starts easing policies.“ Minutes from the Fed’s Dec. 13-14 policy meeting are due at 1900 GMT.
The US central bank had raised rates by 50 basis points (bps) in December after four straight hikes of 75 bps each.
Bullion is seen as a hedge against inflation, but rising rates dull non-yielding asset’s appeal.
The short-term expectation is that gold will climb to $1,880 per ounce and trade broadly around $1,800 for most of the year, said Michael Langford, director at corporate advisory firm AirGuide.
Elsewhere, spot silver rose 0.4% to $24.08.
Traders also kept a tab on rising coronavirus infections in top gold consumer China after the country’s abrupt COVID policy U-turn in early December.
If economic conditions in China improve over the next six months, then it will be positive for vehicle purchases and precious metals such as platinum and palladium, Langford said.
Both the metals are used mainly in vehicle exhaust systems. Platinum was flat at $1,084.25 and palladium gained 1.3% to $1,731.70.
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