Gold prices held steady within a narrow range on Wednesday, with investors cautious ahead of key United States economic data and the Federal Reserve’s monetary policy decision.
As of 3:45 pm AEST (5:45 am GMT), spot gold prices were marginally lower by 30 cents at US$3,326.37 per ounce.
Earlier in the week, gold slipped to a three-week low of $3,302, as traders avoided initiating new positions while awaiting second-quarter U.S. gross domestic product (GDP) figures and the Fed’s interest rate decision.
Economists expect the U.S. economy to grow by 2.4% on an annualised basis in Q2, recovering from a 0.5% contraction in Q1.
The quarterly core personal consumption expenditures (PCE) price index, a key inflation gauge for the Fed, is expected to ease to 2.4% from 3.5% in the prior quarter.
Should incoming data disappoint, it could bolster expectations of two interest rate cuts this year, potentially weakening the U.S. dollar further and lending support to gold prices.
Still, market reaction is expected to remain muted until the Federal Reserve announces its policy decision.
The central bank is widely expected to keep the fed funds rate unchanged in July at 4.25%-4.5%, as policymakers assess the economic implications of recently signed trade agreements by U.S. President Donald Trump.
Investors will closely examine the Fed’s Monetary Policy Statement and Chair Jerome Powell’s comments for indications on the likely timing of any future rate reductions.
According to the CME Group FedWatch Tool, markets are pricing in a 64.1% probability of a 25-basis point cut in September.
Analysts also anticipate a potential split among Fed officials, with Governors like Christopher Waller expected to dissent from the majority. While Powell and other senior policymakers are likely to maintain a wait-and-see approach, some members may support Trump’s push for lower interest rates.
