WASHINGTON: Gold prices edged lower on Wednesday as a firmer dollar and profit-taking paused the metal’s record-breaking run ahead of a key Federal Reserve decision.
Spot gold slipped 0.2 percent to $3,681.23 per ounce as of 0256 GMT, after hitting an all-time high of $3,702.95 on Tuesday. US gold futures for December delivery also eased 0.2 percent to $3,718.90.
Dollar firms as Fed decision looms
The slight pullback came as the dollar index gained 0.1 percent, rebounding from a more than two-month low touched in the previous session. Benchmark US 10-year Treasury yields were also hovering near a five-month low.
“Gold’s climb past $3,700 was fuelled by a weaker dollar and expectations that the Fed may hint at more rate cuts this year,” said Tim Waterer, chief market analyst at KCM Trade. “Profit-taking around that level pulled it back, but if the Fed strikes a dovish tone, gold could make another run higher.”
The Fed is widely expected to announce a quarter-point rate cut later in the day to support the cooling labour market. Investors will be watching closely for comments from Chair Jerome Powell for clues on the pace of further cuts.
Lower interest rates tend to lift gold’s appeal by reducing the opportunity cost of holding the non-yielding asset.
Economic data keeps traders cautious
Fresh US data on Tuesday showed retail sales rose more than expected in August, though economists warned that a weakening job market and rising tariffs could weigh on spending in the coming months.
US President Donald Trump has also urged Powell to deliver a “bigger” rate cut, adding political pressure on the central bank as it navigates slowing growth and stubborn inflation.
Meanwhile, holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.32 percent to 979.95 metric tons on Tuesday from 976.80 tons the previous day, showing continued investor appetite for bullion despite the price dip.
In other metals, spot silver slipped 1.3 percent to $41.98 per ounce, platinum inched up 0.1 percent to $1,392.25, and palladium rose 0.5 percent to $1,182.21.
Read next: Oil prices little changed as supply fears balance Fed expectations