Gold prices edged lower on Wednesday, as an uptick in U.S. Treasury yields and an impending hike in interest rates by the U.S. Federal Reserve dented demand for zero-yield bullion.
FUNDAMENTALS
* Spot gold was down 0.1% at $1,865.31 per ounce, as of 0040 GMT. U.S. gold futures fell 0.2% to $1,866.10.
* Benchmark U.S. 10-year Treasury yields on Wednesday firmed after backing off the key 3% mark in the previous session, ahead of an expected Fed decision to deliver an aggressive 50 basis-point interest-rate hike to contain soaring inflation.
* The U.S.
‘s Federal Open Market Committee is set to announce its decision on rates later on Wednesday, and detail plans to reduce the Fed’s $8.9 trillion balance sheet.
* While gold is seen as an inflation hedge, higher short-term U.S. interest rates and bond yields tend to increase the opportunity cost of holding bullion, which yields nothing.
* The dollar remained close to 20-year peaks, making gold less attractive for overseas buyers.
* Bullion is also seen as a safe store of value during times of economic and political crises.
* Russian forces pounded targets in eastern Ukraine on Tuesday, even as the European Union prepared to slap oil sanctions on Moscow.
* Spot silver dipped 0.1% to $22.54 per ounce,
firmed 0.1% to $962.60, and palladium eased 0.1% to $2,252.51.
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