Gold prices were steady on Wednesday, September 20, aided by a weaker dollar ahead of a U.S. Federal Reserve policy announcement at 1800 GMT that could signal whether it will raise interest rates for a third time this year.
A threat by U.S. President Donald Trump to “totally destroy” North Korea also helped to push the dollar lower while stimulating demand for gold, seen as a safe investment in times of uncertainty.
A weaker dollar makes gold cheaper for holders of other currencies. Spot gold was flat at $1,311.21 an ounce by 1345 GMT, having hit a 2-1/2 week low on Monday at $1,304.10.
U.S. gold futures for December delivery were up 0.4 percent at $1,315.20. “The dollar is under pressure ahead of the Fed,” said ABN
AMRO analyst Georgette Boele. “But I think it’s more to do with the comments from Mr Trump, which are affecting the dollar and indirectly gold as well.”
The Fed is expected to say that it will start to reduce its balance sheet, and investors will scour its forecasts and a news conference by Chair Janet Yellen for clues on the interest rate outlook.
Gold is sensitive to rising rates because they increase bond yields, making non-yielding assets such as bullion less attractive while also tending to boost the dollar, in which gold is priced.
A range of $1,300-$1,290 would be a good base for gold unless the Fed changes its stance on interest rates, said one precious metals trader in Sydney, adding that geopolitical risks would support prices. Technical fibonacci support was around $1,300 with resistance at $1,321.60, ScotiaMocatta analysts said in a note.
In other precious metals, silver was down 0.3 percent at $17.27 an ounce, platinum lost 0.1 percent to $947.50 and palladium was down 0.4 percent at $904.50.
