-- Gold traded lower for a third-straight day early Wednesday, pressured by inflation worries even as the Federal Reserve's policy committee is expected to leave rates unchanged when it ends its two-day meeting this afternoon. Gold for June delivery was last seen down $33.30 to US$4,575.10 per ounce, the lowest since March 30.
With oil trading near four-year highs amid the Iran war, traders have moved away from gold as a safe haven, turning instead to the dollar and bonds to hedge against the threat rising energy prices will boost inflation and force interest rates higher.
"With oil-led inflation risks remaining the main driver, as rising energy prices strengthen the dollar and reinforce a higher-for-longer interest rate outlook. For now, the market's immediate focus remains on mediation efforts, with a reopening of the strait and a subsequent drop in oil prices representing the biggest short-term upside catalyst for both gold and silver," Saxo Bank noted.
But higher rates are not yet on the way. The Federal Open Market Committee and the Bank of Canada will both release interest-rate decisions today and both are expected to leave rates steady.
The dollar was higher early, with the ICE dollar index last seen up 0.09 points to 98.73. Treasury yields also moved up, with the U.S. two-year note last seen paying 3.879%, up 2.9 basis points, while the yield on the 10-year note was up 2.0 points to 4.373%.