Investing.com – Gold prices eased from session highs on Wednesday after the dollar pared some of its losses ahead of the Federal Reserve’s monetary policy position.
Gold futures for February delivery on the Comex division of the New York Mercantile Exchange rose by $4.50, or 0.34%, to $1,339.90 a troy ounce.
Gold prices traded within a narrow roughly $9 range as the dollar bounced off session lows limiting the yellow metal’s advance while investors awaited the Federal Reserve’s decision on monetary policy due 2 p.m. ET.
While the central bank is widely expected to keep interest rates unchanged at 1.5%, investors will focus on the Fed’s language in its policy statement concerning inflation and economic growth for clues on future monetary policy.
During the December meeting, the Federal Reserve said that it expects that economic conditions “warrant gradual increases,” in the federal funds rate, and added that inflation declined in 2017 and was running below 2%.
Should the Federal Reserve reaffirm expectations for three rates hikes, bond yields could surge, former Pimco manager Bill Gross said Wednesday, adding that he expects the US 10Y Bond to hit 3% in 2018.
Gold is sensitive to rising U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
Some market participants warned, however, that the yellow metal may face a period of weakness as physical gold demand is expected to decline as seasonality is starting to fade ahead of the Chinese New Year.
In other precious metal trade, silver futures rose 1.01% to $17.23 a troy ounce, while platinum futures rose 0.33% to $1,005.10.
Copper rose 0.34% to $3.20; while natural gas fell 6.85% to $2.98 as data showing a warmer 10- to 20-day weather outlook, and a rise in US natural gas production weighed.