Gold edges higher ahead of Fed policy decision

NEW YORK: Gold prices edged higher on Wednesday after rising about one per cent in the previous session, as investors awaited the Federal Reserve's policy decision later in the day, with the central bank widely expected to leave interest rates unchanged.

Spot gold rose 0.10 per cent to US$4,061.86 per ounce by 0036 GMT, after climbing more than one per cent and touching a session high of US$4,065.55 on Tuesday. US gold futures for December delivery steadied at US$4,075.60.

Markets await the Fed's policy decision due at 1800 GMT, along with the Personal Consumption Expenditures data on Thursday, a key gauge closely watched by the central bank as it targets a two per cent inflation rate.

Traders largely expect the central bank to leave rates unchanged today but are pricing in about an 84 per cent chance of an interest rate hike in December, according to the CME's FedWatch Tool.

Higher interest rates increase the opportunity cost of holding non-yielding bullion.

High inflation will persist in the global economy well into next year, according to hundreds of economists polled by Reuters, who are increasingly concerned that price pressures will become entrenched beyond rising energy costs caused by the conflict in the Middle East.

On the geopolitical front, Yemen's Iran-aligned Houthis said on Tuesday they had hit Saudi Arabia's Ras Tanura oil refinery, the biggest in the kingdom, with a ballistic missile.

Analysts and traders have cut their platinum and palladium price forecasts for 2026 for a third consecutive quarter as demand cools and the auto sector's outlook darkens, yet a rebound is still expected for both metals in 2027, a Reuters survey showed.

Elsewhere, Japan's core consumer price index, which strips out one-off factors, rose in September at the fastest annual pace in three years, data showed on Tuesday, a sign of broadening price pressures that cement the case for further interest rate hikes.

Spot silver rose 0.10 per cent to US$54.38 per ounce, platinum lost 0.20 per cent to US$1,537.58 and palladium gained 0.50 per cent to US$1,031.42.