Gold prices on Wednesday hovered near a three-week low hit in the previous session as the dollar firmed on expectations that the U.S. Federal Reserve may raise rates in June.
Spot gold was down 0.2% at $1,254.36 per ounce, as of 0717 GMT. Bullion on Tuesday hit $1,251.37 per ounce, its lowest since April 10.
U.S. gold futures fell 0.1% to $1,255.40 an ounce.
The U.S. Federal Reserve concludes its two-day meeting on Wednesday and is largely expected to hold interest rates steady; however, it might focus on future rate hikes.
The dollar traded below a six-week high against the yen, while the dollar index, in which gold is priced, was up 0.1% at 99.058.
“The Fed meeting is the next likely catalyst for gold. There is a good chance that gold will stay range-bound around $1,245-$1,265 for sometime unless the markets take a major lead out of the meeting,” said Jordan Eliseo, Chief Economist with ABC Bullion, Australia.
“Global tensions regarding North Korea has dissipated a bit and that’s why we have seen a pull back in prices, which has been a healthy one as the markets looked a bit over extended,” Eliseo said.
{{/usCountry}}“Global tensions regarding North Korea has dissipated a bit and that’s why we have seen a pull back in prices, which has been a healthy one as the markets looked a bit over extended,” Eliseo said.
{{/usCountry}}Asian stocks were mixed on Wednesday, moderating after earlier strong gains on positive global earnings and manufacturing data.
“The yellow metal is finding it difficult to move away from $1,250 amid firming global equity markets,” said Sam Laughlin, senior precious metals trader, MKS PAMP Group.
“Should we see any surprises from the Fed to push gold below the 200-day moving average, expect the next target on the down-side to sit around $1,230 - $1,235, however, risks surrounding the upcoming French election should temper declines.”
Spot gold may retest a support at $1,249 per ounce, with a good chance of breaking below this level and falling to the next support at $1,228, according to Reuters technical analyst Wang Tao.
“If the Fed mirrors the stance of what other central banks have been doing over the past week and tacks to a more accommodative stance, we could see gold experience something of a bounce,” INTL FCStone analyst Edward Meir said.
Higher rates would reduce demand for non-interest bearing gold and would also make the dollar-denominated metal more expensive for buyers paying with other currencies.
Silver edged up 0.2% to $16.82 per ounce, after hitting a three-month low in the previous session.
Platinum dropped 0.5% to hit a four-month low of $917.95.
Palladium rose 0.5% to $818.72 per ounce.