Investing.com - Gold prices rallied for a fifth consecutive session on Wednesday ahead of the Federal Reserve’s decision on interest rates and a follow-up press conference with its chairman, Jerome Powell.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange, rose $1.80, or 0.1%, to $1,431.50 a troy ounce by 7:47 AM ET (11:47 GMT).
“There is no let-up in gold demand from investors, even as they await the outcome of today’s Fed meeting and any comments on forward guidance,” Wenyu Yao and Warren Patterson, commodities strategists at ING, said in a daily note, pointing to the fact that total ETF holdings in gold hit a fresh six-year high a day earlier.
“The Fed is widely expected to cut rates by 25 basis points at today’s meeting, and then the market will be focused on what the Fed signals in terms of further cuts moving forward,” they added.
Ahead of the announcement at 2:00 PM ET (18:00 GMT), expectations for the quarter-point reduction remain at 100%, with market odds at 70% for an additional cut in September and at just above 50% for a third cut in December.
John Hardy, strategist at Saxo Bank, said guidance would be key for markets that want to know whether this will be a one-off cut or the beginning of a series.
“The Fed may not want to encourage asset market froth but, then again, any linking of policy to other factors, like the strong U.S. dollar, would allow the market to draw its own conclusions that the Fed will continue to cut,” he said.
Investing.com senior commodity analyst Barani Krishnan said that gold testing 2019 highs after a confirmation of a quarter-point cut would be a "tall order".
“Unless Powell sounds sufficiently dovish on the road map for rates in his press conference later, gold may have trouble holding on to its gains,” he said.
In other metals trading, silver futures fell 0.5% to $16.477 a troy ounce by 7:49 AM ET (11:49 GMT).
Palladium futures advanced 1.1% to $1,525.15 an ounce, while sister metal platinum rose 0.7% to $878.65.
In base metals, copper edged forward 0.1% to $2.682 a pound.
-- Reuters contributed to this report.