By Gina Lee
Investing.com – Gold was up on Wednesday morning in Asia, hovering near their highest level in more than two weeks over growing expectations of higher inflation. However, caution ahead of a capped gains.
were up 0.22% at $1,734.75 by 12:17 M ET (4:17 AM GMT) and the gained for a fourth consecutive session. The greenback was boosted by benchmark U.S. Treasury yields that are climbing, with expectations of a strong economic recovery increasing after a $1.9 trillion recovery package was signed into law during the previous week.
“Gold appears to be finding few friends finally even as U.S. yields and the dollar continue to grind higher … perhaps gold’s inflation hedging role is quietly returning to prominence and that is supporting prices,” OANDA senior market analyst Jeffrey Halley told Reuters.
Some investors expect that the yellow metal’s true test will come once the Fed hands down the policy decision later in the day and whether it can remain steady in the face of another spike in U.S. yields.
Investors will also pay close attention to the Fed’s comments on the recent spike in bond yields, fears about rising inflation, and the economic outlook.
As the market awaits the Fed comments, the technical picture remains bearish. “A trade through $1,696 will signal a resumption of the downtrend. The main trend will change upwards when buyers take up positions above $1,760 an ounce,” Phillip Futures senior commodities manager Avtar Sandu said in a note.
The is due to hand down its policy decision on Thursday, followed by the on Friday.
In other precious metals, silver fell 0.4%, palladium edged down 0.2%, after hitting a one-year high of $2,520.31 on Tuesday, and platinum was down 0.4%.
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