LONDON: Gold recovered from a three-week low as the dollar eased on profit-taking ahead of the US Federal Reserve’s meeting later on Wednesday, which could provide further clues on the pace of expected interest rate increases. With a rate rise of 25 basis points seen as a done deal, investors will be on the lookout for whether the Fed forecasts four increases in 2018, one more than previously forecast.

Spot gold was up 0.4 per cent at $1,315.71 an ounce at 1111 GMT, having dropped as low as $1,306.91 in the previous session. US gold futures for April delivery rose 0.3pc to $1,315.40.

“A 25 base hike is priced in, so the potential impact could come from the statement and what happens to the Fed projection for inflation and rate expectations in 2018,” said Capital Economics com­­modities economist Simona Gambarini.

The dollar index, which measures the greenback against a basket of six major currencies, slipped 0.3pc to 90.135 after climbing to its highest since March 1 in the previous session. A weaker greenback makes dollar-denominated assets such as gold cheaper for holders of other currencies.

The Fed will make an announcement on interest rates at 1800 GMT on Wed­nesday and new Fed Chairman Jerome Powell will hold his first news conference at 1830 GMT. The expectations for a faster pace of US rate hikes have caused gold to fall 4pc from a 1-1/2 year high reached in January. Higher US interest rates typically reduce demand for non-yielding bullion, though analysts said that the possibility of an escalation in geopolitical tensions could cushion gold.

Silver added 0.5pc to $16.29 an ounce while platinum was up 0.5pc at $944.90 and palladium rose 0.2pc to $980.50.

Published in Dawn, March 22nd, 2018