Gold prices retreated from session highs on Wednesday but remained positive after the US Federal Reserve confirmed policymakers' sentiment of a stronger US economy, denting safe haven appeal. All Fed policymakers felt the US economy would firm further and inflation would rise in coming months, minutes of the central bank's last policy meeting on March 20-21 released Wednesday showed.
Spot gold gained 0.8 percent at $1,349.91 per ounce by 2:38 p.m. EDT (1838 GMT), while June US gold futures settled up $14.10, 1.1 percent, at $1,360. "The Fed continues to maintain their hawkish tilt and they are of the views, right now, that the steel and aluminum tariffs don't really have a big effect on the outlook," said Shree Kargutkar, portfolio manager at Sprott Asset Management.
Since the March meeting, Fed officials have largely adopted a wait-and-see attitude to trade policy, noting it is not yet clear if the tariffs will go into effect and their eventual size if implemented. The Fed is expected to keep rates unchanged at its next policy meeting on May 1-2, but investors overwhelmingly see another rate increase at the following one in mid-June.
Gold is highly sensitive to rising US interest rates because the metal does not pay interest and rising rates make interest-bearing investments more attractive. Gold earlier rose close to 2 percent to $1,365.23 per ounce, its highest since Jan. 25, as escalating tensions in Syria, US sanctions on Russia and the US-China trade stand-off weighed on stock markets and the dollar index.
"The safe haven bid, recently with Syria tensions along with the weaker dollar, continues to support gold today," said David Meger of High Ridge Futures. Safe haven bids have sparked good demand for gold through products such as bullion-backed exchange-traded funds, said Capital Economics analyst Simona Gambarini. "Gold is benefiting from the risk-off sentiment and because people are trying to hedge against worst-case scenarios."
The greenback, in which gold is priced, languished near a two-week low against a basket of currencies. Gold is often perceived as a safe store of value during times of political and financial uncertainty. Meanwhile, silver increased 0.55 percent to $16.64 an ounce, earlier reaching $16.87, a near two-month high. Platinum rose 0.7 percent to $930.70 per ounce, off a $941.60, a two-week high.
Palladium increased 1 percent at $961.50 per ounce, earlier reaching $971.30, a two-week high. The autocatalyst metal, of more than 40 percent is produced in Russia, bounced strongly as sanctions against Moscow fed into a technically-driven rally.
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