Gold inched lower on Wednesday morning as investors waited for a key decision on interest rates from the US Federal Reserve which could influence the outlook for bullion, amid growing worries over the state of the economy.
Spot gold was down 0.1 per cent to $1,716.9 per ounce by 9.30 am UAE time.
In the UAE, the 24K price fell to Dh207.75 per gram at the opening of the market on Wednesday as compared to Dh208.5 per gram at the close of the markets on Tuesday. While 22K, 21K and 18K opened at Dh195.25, Dh186.25 and Dh159.5 per gram, respectively.
The US central bank is widely expected to raise interest rates by another 75 basis points at the conclusion of its policy meeting on Wednesday.
Naeem Aslam, chief market analyst at AVA Trade, said what matters the most for the gold prices is the future path of the Fed interest rate and this is where traders are likely to see the biggest reaction in the market.
“If the Fed shows that they are going to increase the rates by 75 basis points in the coming meeting as well, that would be highly bullish for the dollar. As a result, we could see a steep sell-off in the gold price. On the other hand, if the Fed says that the future interest rate increase could be somewhere near the 50 basis points, the gold price may continue to rally,” said Aslam.
Benchmark S&P 500 index rises 1.8 per cent
Spot gold was trading at $1,785.82 per ounce at 9.20am UAE time
Spot gold was trading at $1,771.62 per ounce, down by 0.2 per cent at 9.15am
Analysts and forex experts caution that the political instability will continue to weigh on the rupee's future and may slow the recovery pace in coming days