Gold prices inched up on Wednesday, as the dollar weakened slightly, while investors waited for a key decision on interest rates from the U.S. Federal Reserve which could influence the outlook for bullion, amid growing worries over the state of the economy.
Spot gold firmed 0.1% to $1,718.97 per ounce, by 0041 GMT, while U.S. gold futures dipped 0.1% to $1,716.70.
Wall Street equities fell and U.S. Treasuries rallied on Tuesday, a day before a likely Federal Reserve rate hike as investors grappled with growing economic concerns with signs of a looming gas supply crisis in Europe.
The U.S. central bank is widely expected to raise interest rates by another 75 basis points at the conclusion of its policy meeting on Wednesday.
Higher interest rates and bond yields increase the opportunity cost of holding non-yielding bullion.
The dollar eased slightly after a sharp rise on Tuesday. A weaker dollar helps gold’s appeal among buyers holding other currencies.
Gold Gains on Declining U.S Consumer Confidence.
U.S. consumer confidence dropped to a near 1-1/2-year low in July amid persistent worries about increasing inflation and higher rates, which could undercut spending, pointing to slower economic growth at the start of the third quarter.
The global economy is in the grips of a serious slowdown, with some key economies at high risk of recession and only sparse meaningful cooling in inflation over the next year, according to Reuters polls of economists.
Spot silver rose 0.4% to $18.68 per ounce, platinum gained 0.3% to $876.22, and palladium firmed 0.4% to $2,017.56.