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Fed policy decision due at 1900 GMT
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U.S. labour cost growth smallest in a year
(Adds details and updates prices)
By Ashitha Shivaprasad
Feb 1(Reuters) - Gold held steady on Wednesday, as
investors refrained from taking big bets ahead of the U.S.
Federal Reserve's policy decision due later in the day.
Spot gold was flat at $1,927.75 per ounce, as of 0720
GMT. U.S. gold futures fell 0.1% to $1,943.40.
Gold should hold above $1,900 levels heading into the Fed
meeting and the Fed message needs to be heard to grasp bullion's
next likely direction, said Matt Simpson, a senior market
analyst at City Index.
The Fed's policy decision is due at 1900 GMT, followed by a
press conference by Chair Jerome Powell at 1930 GMT. The U.S.
central bank is widely expected to scale back rate hikes to 25
basis points (bps) from 50 bps in December. Lower interest rates tend to be beneficial for bullion,
decreasing the opportunity cost of holding the non-yielding
asset.
"There is a semi-decent chance that Powell will not deliver
the dovish hike markets want... So, that leaves gold vulnerable
to a bump in the road at these highs, if we see the inevitable
higher dollar and yields in case Powell keeps quiet on a pause
or pivot," said Simpson. Meanwhile, data released on Tuesday showed U.S. labour costs
increased at their slowest pace in a year in the fourth quarter
as wage growth slowed.
The Bank of England and the European Central Bank are
expected to raise rates by 50 bps on Thursday.
India, in its federal budget for 2023/24, announced an
increase in duty on items made from gold and platinum.
Among other precious metals, spot silver was steady
at $23.70 per ounce, platinum rose 0.2% to $1,012.63 and
palladium inched 0.3% higher to $1,654.92.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by
Subhranshu Sahu and Rashmi Aich)
