Gold inches higher as markets await Fed decision, dollar softens

SINGAPORE: Gold prices saw a modest rise on Wednesday as a dip in US Treasury yields and a slight retreat in the dollar helped support the metal, while investors kept a close watch on the US Federal Reserve’s policy statement due later in the day.

By 2:36am GMT, spot gold had inched up by 0.1 per cent to $3,329.27 per ounce. US gold futures also gained 0.1 per cent, trading at $3,326.90.

Analysts believe that shifting expectations around the Fed’s stance on interest rates are playing a key role. “There’s a chance the Fed could lean more dovish, and that’s showing up in lower Treasury yields,” said Kelvin Wong, senior market analyst at OANDA. He added that the recent strength in the dollar had also slightly weakened.

The dollar index pulled back from a one-month high, while the benchmark 10-year US Treasury yield hovered near its lowest level in a month.

Although the Fed is expected to leave interest rates unchanged, markets are still pricing in the possibility of a rate cut in September. US President Donald Trump has continued to push for lower rates, but the central bank has so far held steady. A lower interest rate environment typically benefits gold, which doesn’t offer interest or dividends but gains appeal as bond yields fall.

Wong noted that if gold manages to rise above $3,350 this week, especially after the release of upcoming US inflation and employment data, it could strengthen bullish sentiment in the short term.

Meanwhile, trade tensions between the US and China remain in focus. Following two days of talks in Stockholm, both sides agreed to seek an extension of their 90-day tariff truce, which is due to expire on August 12. Any final decision, however, will rest with President Trump.

In a related development, the International Monetary Fund (IMF) slightly upgraded its global growth forecasts for 2025 and 2026. It pointed to stronger-than-expected purchases ahead of looming US tariffs and a drop in the effective US tariff rate from 24.4 per cent to 17.3 per cent.

In other precious metals, spot silver slipped by 0.1 per cent to $38.14 per ounce, platinum fell 0.6 per cent to $1,386.31, while palladium gained 0.4 per cent to $1,262.99.

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