Gold steadies as inflation jitters offset U.S. 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 was little changed at $1,924.65 per ounce by 10:49 a.m. ET, and U.S. gold futures 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. ET

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

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

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

“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 rose 0.3% to $24.38, platinum fell 1.9% to $949.81, and palladium was also down 1.9% at $2,196.86