Gold steadies as inflation jitters offset US interest rate hike bets

Gold prices steadied on Wednesday with concerns over high inflation offsetting expectations of an aggressive interest rate hike by the U.S. Federal Reserve, while markets also awaited the minutes from the central bank's last policy meeting.

Spot gold XAU= was little changed at $1,924.65 per ounce by 10:49 a.m. EDT (1449 GMT), and U.S. gold futures GCv1 were steady at $1,927.80

"Inflation fears and the inflation data we've been seeing is what's keeping gold up," said RJO Futures senior market strategist Bob Haberkorn.

Gold should remain strong despite the Fed raising rates, but if the Fed goes a half a basis point, gold could fall towards the $1,900 level, Haberkorn added.

 

The Fed is due to release the minutes from its March 15-16 Federal Open Market Committee policy meeting at 2 p.m. EDT (1800 GMT).

Rising U.S. interest rates and higher yields increase the opportunity cost of holding bullion, which is also used as a hedge against rising inflation.

The precious metal touched its lowest level since March 29 earlier in the day, after Fed Governor Lael Brainard's comments bolstered expectations for aggressive action by the U.S. central bank to tame inflation. (Full Story)

Brainard's remarks propelled the U.S. dollar and Treasury yields to multi-year highs, dimming gold's appeal. USD/ US/

The Nasdaq fell 2% on Wednesday on mounting concerns over aggressive actions by the Fed while the war in Ukraine compounded worries over rising inflation. (Full Story) .N

"There's still a number of things that could trigger another rally in gold. Inflation continuing to rise beyond current expectations, Ukraine/Russia talks collapsing or a recession," said Craig Erlam, senior market analyst at OANDA.

Among other precious metals, silver XAG= rose 0.3% to $24.38, platinum XPT= fell 1.9% to $949.81, and palladium XPD= was also down 1.9% at $2,196.86.

(Reporting by Seher Dareen and Eileen Soreng in Bengaluru; Editing by Shailesh Kuber)