Gold prices rise ahead of key Fed policy meeting; trade optimism weighs

Investing.com-- Gold prices rose Wednesday, bouncing after recent losses, ahead of an expected Federal Reserve rate cut later in the day.

At 09:15 ET (13:15 GMT), Spot gold edged up 1.6% to $4,017.52 per ounce as of 06:43 ET (10:43 GMT), and U.S. Gold Futures gained 1.2% to $4,031.21 an ounce.

The yellow metal slipped sharply lower over the last couple of days, reaching its lowest level since early October.

Fed set to cut rates

The U.S. Federal Reserve concludes its two-day policy meeting later in the session, and is widely anticipated to announce a 25-basis­-point interest rate cut.

While lower interest rates normally support gold, investors are placing particular weight on the forward guidance from policymakers, especially as the U.S. government shutdown has deprived investors of a clearer picture of the state of the U.S economy.

If Fed Chair Jerome Powell signals that further cuts may be delayed or inflation remains a concern, higher real yields or a firmer dollar could dampen gold’s appeal.

Trump continues his Asian visit 

Gold has been pressured of late by positive developments in U.S.-China trade, with a framework agreement between Beijing and Washington over tariffs and rare-earth export controls having raised hopes of a thaw.

Additionally, U.S. President Donald Trump said he expects to cut the 20% tariff on Chinese imports tied to fentanyl precursor chemicals ahead of his scheduled summit with Xi Jinping in South Korea on Thursday.

After a visit to Tokyo, Trump arrived in South Korea on Wednesday for a summit in Gyeongju with South Korean President Lee Jae‑Myung.

These signals of easing trade and geopolitical risk tend to reduce demand for safe-haven assets like gold, contributing to the recent pull-back from record highs.

Metal markets push higher

Other precious and industrial metals were also subdued on Wednesday as investors squared positions ahead of the Fed decision. 

Silver Futures edged 1.8% higher to $48.175 per ounce, and Platinum Futures gained 1.6% to $1,609.50/oz.

U.S. Copper Futures gained 1% to $5.22 a pound.

Ayushman Ojha contributed to this article