Gold prices edged lower on Wednesday as the U.S. dollar regained some ground, while traders assessed chances of the U.S. Federal Reserve raising interest rates just once more in May before pausing.
Spot gold was down 0.1% at $2,003.03 per ounce, as of 0337 GMT. U.S. gold futures fell 0.2% to $2,016.20."Expectations are already priced for a 25 basis points hike, leaving much of the focus to be on whether a rate pause will be signalled thereafter," said Yeap Jun Rong, a market analyst at IG.
"While that may provide an anchor for gold prices, given the recent rally and overextended technical conditions, the possibility of some unwinding upon validation of the Fed's rate outlook may still remain on the table."shows that markets see an 83.2% chance of a 25 basis-point hike in May, with potential rate cuts being priced in later in the year.
Gold is considered a hedge against inflation, but higher interest rates dim the non-yielding asset's appeal. The Fed should continue raising interest rates on the back of recent data showing inflation remains persistent while the broader economy seems poised to continue growing, even if slowly, St. Louis Fed President
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