Gold price holds 2-month high ahead of Fed announcement

Gold prices retreated but still held near a two-month high on Wednesday, as investors await the outcome of a US Federal Reserve meeting that may offer more clues on the outlook for monetary policy tightening.

Spot gold declined 0.8% to $1,833.15/oz by noon EDT, its highest since mid-November. US gold futures fell 1.0%, trading at $1,832.70/oz in New York.

Later in the day, Fed chair Jerome Powell and his fellow policymakers are expected to signal their first interest-rate hike since 2018, setting the stage for a March move to cool inflation.

The Federal Open Market Committee is all but certain to hold its benchmark rate near zero after the two-day meeting ending Wednesday, while sticking to a plan to end its bond-buying program in March.

Bullion has risen more than 4% since the end of November amid headwinds in equity markets as investors hone in on the possibility of an error by the Fed. The risk of a Russian invasion of Ukraine and a cut in the International Monetary Fund’s world economic growth forecast for this year are also aiding the safe haven asset.