Gold steadied near $1,230 an ounce on Wednesday, clinging to modest gains from the previous session, ahead of the next guidance from the Federal Reserve on whether it will hike U.S. interest rates sooner or keep them lower for longer. The Fed wraps up its two-day policy meeting later on Wednesday at which it is expected to end its bond purchases amid signs of strength in the U.S. economy.
But policymakers will likely reinforce its stated willingness to wait longer before raising interest rates after a volatile month in financial markets. “The potential for surprise out of the Fed tonight is probably pretty low. QE (quantitative easing) will end but I don’t think they’ll deviate from what they’ve said previously,” said Victor Thianpiriya, analyst at Australia and New Zealand Banking Group.
Keeping U.S. interest rates lower for a longer period bodes well for a non-interest bearing asset such as gold. Spot gold was up 0.1 percent at $1,229.25 an ounce by 0213 GMT, after gaining 0.2 percent on Tuesday. U.S. gold futures were nearly flat at $1,229.30 an ounce.