BENGALURU: Gold prices edged up on Wednesday, buoyed by weaker Treasury yields, but bullion was still near its lowest in over three weeks as the dollar inched higher ahead of the US Federal Reserve’s interest rate decision and policy outlook.

Spot gold gained 0.1% at $1,981.30 per ounce, as of 1157 GMT. US gold futures rose 0.2% to $1,997.60. The dollar index rose 0.1%, making gold more expensive for other currency holders, but falling US 10-year Treasury yields lent some support to prices.

“Gold is repricing with what’s happening in the yields market, because investors have been extremely confident that the Federal Reserve is going to cut rates quickly in the first part of 2024, now market is a less sure about it,” Carlo Alberto De Casa, market analyst at Kinesis Money, said.

The Fed’s rate-setting policy committee will release its policy statement and interest rate decision at 1900 GMT, followed by Chair Jerome Powell’s press conference at 1930 GMT. “I expect the Fed to remain stable, if something is going to happen it will more likely happen in the second and third quarter 2024,” De Casa added.

The Fed is expected to leave rates unchanged at 5.25%-5.50% but markets are pricing in about a 43% chance of a rate cut in March and a 75% chance for the same in May, according to CME FedWatch Tool. Investors will be watching for comments from Powell that could ascertain the policy outlook.

Lower interest rates increase the appeal of holding gold. Market participants also awaited the European Central Bank and the Bank of England’s policy meetings on Thursday. Silver slipped 0.3% to $22.68 per ounce, while platinum fell 1.3% to $917.57 and palladium skidded 1.5% to $964.62.