Gold prices traded little changed during Asian trading on Wednesday, recovering slightly from a sharp decline in the previous session as investors awaited the release of the United States Federal Reserve's July meeting minutes.
The minutes, due later on Wednesday (Thursday AEST), will be closely watched for fresh clues on the central bank's interest-rate outlook and could provide further direction for gold prices.
By 4:15 pm AEST (6:15 am GMT), spot gold was up 0.1% at US$4,337.40 an ounce.
Recent weakness in U.S. labour market data and moderate inflation readings have prompted markets to scale back expectations for a September Fed rate hike, with the probability falling to 34.8%, according to the CME Group FedWatch Tool.
The Federal Open Market Committee (FOMC) minutes will therefore be scrutinised for further insight into policymakers' views under the leadership of Fed Chair Kevin Warsh, particularly regarding the future path of interest rates.
The FOMC voted 9-3 to leave interest rates unchanged at 3.5%-3.75% at its July meeting, while Warsh reiterated the importance of maintaining price stability.
Gold also found some relief after coming under heavy selling pressure on Tuesday as U.S. Treasury yields surged to multi-decade highs.
Global bond yields jumped sharply amid uncertainty over the reopening of the Strait of Hormuz, pushing oil prices to three-week highs and reviving concerns about inflation.
Higher yields typically weigh on gold, as the non-yielding asset becomes less attractive relative to interest-bearing investments.
