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Fed minutes due at 1900 GMT
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U.S. dollar index down 0.1%
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U.S. 10-yr Treasury yields hit highest since November
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Silver, platinum off one-week highs marked on Tuesday
(Adds details, updates prices)
By Kavya Guduru
Feb 22 (Reuters) - Gold prices rose marginally on
Wednesday, as investors awaited minutes of the U.S. Federal
Reserve's latest policy meeting to assess prospects of further
interest rate hikes.
Spot gold was up 0.1% at $1,835.79 per ounce, as of
0643 GMT. U.S. gold futures firmed 0.1% to $1,844.00.
Although gold is considered an inflation hedge, rising
interest rates increase the opportunity cost of holding bullion
since it pays no interest.
"Gold is leaning on the ropes, but it's not doing too bad
considering how high U.S. yields have moved – following a slew
of strong economic data, which points to a higher terminal Fed
rate," said Matt Simpson, a senior market analyst at City Index.
Data on Tuesday showed U.S. business activity unexpectedly
rebounded in February to its highest level in eight months - the
latest in a stream of data that have shown signs of a resilient
U.S. economy and a tight labour market.
"Traders will be more sensitive to hawkish clues in the FOMC
(Federal Open Market Committee) minutes, which could weigh on
gold prices," said City Index's Simpson.
"There's a greater chance of gold testing $1,800 before it
tests $1,900 over the foreseeable future... given the prospects
of markets repricing a higher terminal Fed rate," Simpson added.
Minutes of the Fed's latest meeting are due at 1900 GMT
on Wednesday. The Fed raised rates by 25 basis points at its
Jan. 31-Feb. 1 meeting, and is expected to raise benchmark rates
above 5% by May with a peak seen at 5.347% in July. Gold may retest a support of $1,830 per ounce, a break
below which could open the way to $1,816, according to Reuters
technical analyst Wang Tao.
The dollar index eased 0.1%, making
greenback-priced bullion less expensive for buyers holding other
currencies. Benchmark U.S. 10-year Treasury yields hit their highest since November. Spot silver was little changed at $21.83 per ounce
and platinum firmed 0.2% to $944.18. Both metals were off
one-week highs hit on Tuesday.
Palladium lost 0.4% to $1,518.92.
(Reporting by Kavya Guduru in Bengaluru; Editing by Rashmi
Aich, Subhranshu Sahu and Varun H K)
