Gold bounces back as dollar slips, Fed on focus

Gold prices gave up initial losses on Wednesday to touch a one-week high as the US dollar was down and market investors wait for the Federal Reserve decision.

With the Federal Reserve expected to hike its key interest rate by three-quarters of a percentage point on Wednesday to battle high inflation, focus will shift to how deeply signs of an economic slowdown have registered with its policymakers, Reuters reported.

The anticipated increase in the target federal funds rate, the Fed’s key tool in trying to lower inflation from a four-decade high, will bring the U.S. central bank to a mile marker of sorts as it reaches a level of around 2.4% that is estimated to no longer encourage economic activity.

The dollar index — which gauges strength in the greenback against six peers — fell 0.2 percent to 106.9.

Spot gold was up 0.1% or $0.90 to trade at $1,718.60 per ounce, as of 1213 GMT. U.S. gold futures gained 0.1% to $1,736.60 per ounce.